in equal annual installment of P600,000 at the end of each ofJoshua Company bought a new machine and agreed to payin equal annual installment of P600,000 at the end of each ofthe next five years. The prevailing interest rate for this typeof transaction is 12%.The present value of an ordinary annuity of 1 at 12% for fiveperiods is 3.60. The future amount of an ordinary annuity ofi at 12% for five periods is 6.35. The present value of 1 at12% for five periods is 0.567.1. What amount should be reported as note payable iffinancial statements were prepared today?a. 1,700,000b. 2,160,000c. 3,000,000d. 3,810,0002. What is the interest expense for the first year?a. 259,200b. 187,200c. 360,000d. 457,200

In order to determine the interest expense, the amount reported as notes payable is required to be…

Answered: Joshua Company bought a new machine and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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If the interest rate is 13% compunded semi-annually made on the account, and the obligations are given below: Deposit of P13,521 at the end of 3 and a half years. Withdrawal of P20,812 at the end of 5 years. Semi-annual deposit of a perpetuity of P1,200 starting at the end of 6 and a half years. Determine the following: a.) Present value of all the obligations made on the account. b.) Additional amount of withdrawal at the end of 5 years to balance the cash flows. NOTE: DO NOT USE EXCEL
Lidia deposits $800 at the END of each year for 8 years in a savings account. The account pays 12% interest, compounded annually. Lidia calculates that the future value of the ordinary annuity is $9839.75. What would be the future value if deposits are made at the BEGINNING of each period rather than the END? the options are: a. 8071.21 b. 9839.75 c. 11020.53 d. 11820.53
There is a perpetuity due in which the payments increase by 5 percent per year, and the present value of the 6’th payment is equal to the present value of the 8’th payment. The first payment is 500 dollars. Find both the effective interest rate and the present value.
An annuity-due makes payments of $15 every other year, with the first payment beginning immediately. The annuity-due makes ten payments. The nominal annual interest rate compounded semiannually is 5%. Calculate the present value of the annuity due. a. 100.0958 O b. 93.2775 O c. 66.7310 d. 124.3700 O e. 133.4620
An annuity is paid half-yearly in arrears at a rate of 9000 per annum, for 11 years. The rate of interest is 3% per quarter-year effective. Calculate the accumulation of the annuity at the end of 11 years. Give your answer to two decimal places.
A company will receive payments of $1,500 per year for the next four years under a subscription contract. The first payment will be made at the beginning of the contract. Assuming an annual interest rate of 3% is appropriate, the present value of an ordinary annuity is 3.71710 x $1,500 = $5,576, and the present value of an annuity due is 3.82861 x $1,500 = $5,743. Which amount must the company record for this sale in accordance with generally accepted accounting principles (GAAP) if collection is reasonably assured? $0 $5,576 $6,000 $5,743
Annuity A has 20 years annual payments as follows:- i) ii) iii) Annuity i) ii) iii) The first payment is 1000 made at the end of the first year. The subsequent payments increase by 3% from the previous years. The effective interest rate is 5% per annum. B has 20 years annual payments as follows:- The first payment is X made at the end of the first year. The subsequent payments increase by X from the previous years. The effective interest rate is 6% per annum. Annuity C is an annuity immediate of 20-year annual level payments with effective interest rate of 7% per annum. Evaluate, (a) Present value of Annuity A (b) X if present value of Annuity A is equal to present value of Annuity B. stelua. [3 marks] (c) Level payment of Annuity C if present value of Annuity C is TWICE the present value of Annuity A. (d) Sum of future value of these annuities at the end of 20 years. 13 marks] Preval 13 marks
Find the present value of an annuity with annual payments of $1,100.00 compounded at the end of each year for 8 years after being deferred for 3 years, if money is worth 6.3%, compounded annual. The present value would be $ . (Round to 2 decimal places.)
The present value of an ordinary annuity of $350 each year for five years, assuming an interest rate of 4%, is: $288 $1,558 $1,896 $1,750
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