a. Bought a delivery truck and agreed to pay $61,000 at the end of three years. b. Rented an office building and was given the option of paying $11,000 at the end of each of the next three years or paying $29,000 immediately. c. Established a savings account by depositing a single amount that will increase to $92,000 at the end of seven years. d. Decided to deposit a single sum in the bank that will provide 9 equal annual year-end payments of $41,000 to a retired employee (payments starting December 31 of this year).
a. Bought a delivery truck and agreed to pay $61,000 at the end of three years. b. Rented an office building and was given the option of paying $11,000 at the end of each of the next three years or paying $29,000 immediately. c. Established a savings account by depositing a single amount that will increase to $92,000 at the end of seven years. d. Decided to deposit a single sum in the bank that will provide 9 equal annual year-end payments of $41,000 to a retired employee (payments starting December 31 of this year).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
am. 117.
Transcribed Image Text:On January 1 of this year, Skamania Company completed the following transactions (assume a 9% annual interest rate): (FV of $1, PV of
$1, FVA of $1, and PVA of $1)
Note: Use the appropriate factor(s) from the tables provided.
a. Bought a delivery truck and agreed to pay $61,000 at the end of three years.
b. Rented an office building and was given the option of paying $11,000 at the end of each of the next three years or paying
$29,000 immediately.
c. Established a savings account by depositing a single amount that will increase to $92,000 at the end of seven years.
d. Decided to deposit a single sum in the bank that will provide 9 equal annual year-end payments of $41,000 to a retired
employee (payments starting December 31 of this year).
Required:
a. What is the cost of the truck that should be recorded at the time of purchase?
b. Which option for the office building results in the lowest present value?
c. What single amount must be deposited in this account on January 1 of this year?
d. What single sum must be deposited in the bank on January 1 of this year?
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required a Required b
Required c Required d
What single sum must be deposited in the bank on January 1 of this year? (Round your answer to nearest whole dollar.)
Amount to deposit
<Required c
Required d
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