On January 1, Boston Company completed the following transactions (use a 7% annual interest rate for all transactions): (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)Promised to pay a fixed amount of $7,300 at the end of each year for eight years and a one-time payment of $117,600 at the end of the 8th year.Established a plant remodeling fund of $491,950 to be available at the end of Year 9. A single sum that will grow to $491,950 will be deposited on January 1 of this year.Agreed to pay a severance package to a discharged employee. The company will pay $76,300 at the end of the first year, $113,800 at the end of the second year, and $151,300 at the end of the third year.Purchased a $176,500 machine on January 1 of this year for $35,300 cash. A five-year note is signed for the balance. The note will be paid in five equal year-end payments starting on December 31 of this year.In transaction (a), determine the present value of the debt. (Round your answer to nearest whole dollar.). In transaction (b), what single sum amount must the company deposit on January 1 of this year? (Round your answer to nearest whole dollar.)In transaction (c), determine the present value of this obligation. (Round your answer to nearest whole dollar.)In transaction (d), what is the amount of each of the equal annual payments that will be paid on the note? (Round your answer to nearest whole dollar.)

1) Interest = $7300 Repayment at the end =$117600 Number of years =8 years year Cash Flow Discount present factor @7% value at 7% 1 $7,300.00 0.934579 $ 6,822.43 2 $7,300.00 0.873439 $6,376.10 3 $ 7,300.00 0.816298 $5,958.97 4 $7,300.00 0.762895 $5,569.14 5 $7,300.00 0.712986 $ 5,204.80 6 $7,300.00 0.666342 $4,864.30 7 $7,300.00 0.62275 $4,546.07 8$ 7,300.00 0.582009 $4,248.67 8th year $117,600.00 0.582009 $68,444.27 Present value of the debt =$ 112,034.75 2) Amount to be invested $491950 PVAF 7%,9years $491950 ×0.5439 =$267571.6 3) present value of the obligation year Cash Flow Discount present factor @7% value at 7% 1 $76300 0.934579 $71308.41121 2 $113800 0.873439 $99397.32728 3 $151300 0.816298 $123505.8688 present value of the obligation =$294211.6073 4) Annual payments will be paid on the note payable Note payable ($176500-$35300) =$141200 1 0.934579439 2 0.873438728 3. 0.816297877 4 0.762895212 5 0.712986179 total = 4.100197436 Annual payment=($ 141200/4.100197436) =$34437.36606

Answered: third year. Purchased a $176,500…

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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On January 1, Boston Company completed the following transactions (use a 7% annual interest rate for all transactions): (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Promised to pay a fixed amount of $7,300 at the end of each year for eight years and a one-time payment of $117,600 at the end of the 8th year.
Established a plant remodeling fund of $491,950 to be available at the end of Year 9. A single sum that will grow to $491,950 will be deposited on January 1 of this year.
Agreed to pay a severance package to a discharged employee. The company will pay $76,300 at the end of the first year, $113,800 at the end of the second year, and $151,300 at the end of the third year.
Purchased a $176,500 machine on January 1 of this year for $35,300 cash. A five-year note is signed for the balance. The note will be paid in five equal year-end payments starting on December 31 of this year.

In transaction (a), determine the present value of the debt. (Round your answer to nearest whole dollar.)

. In transaction (b), what single sum amount must the company deposit on January 1 of this year? (Round your answer to nearest whole dollar.)

In transaction (c), determine the present value of this obligation. (Round your answer to nearest whole dollar.)

In transaction (d), what is the amount of each of the equal annual payments that will be paid on the note? (Round your answer to nearest whole dollar.)

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