GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
17th Edition
ISBN: 9781260218831
Author: Libby
Publisher: MCG CUSTOM
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Chapter 9, Problem 9.13E
Computing Four Present Value Problems
On January 1 of this year. Shannon Company completed the following transactions (assume a 10% annual interest rate):
- a. Bought a delivery truck and agreed to pay $60,000 at the end of three years.
- b. Rented an office building and was given the option of paying $10,000 at the end of each of the next three years or paying $28,000 immediately.
- c. Established a savings account by depositing a single amount that will increase to $90,000 at the end of seven years.
- d. Decided to deposit a single sum in the bank that will provide 10 equal annual year-end payments of $40,000 to a retired employee (payments starting December 31 of this year).
Required (show computations and round to the nearest dollar):
- 1. In (a), what is the cost of the truck that should be recorded at the time of purchase?
- 2. In (b), which option for the office building results in the lowest present value?
- 3. In (c), what single amount must be deposited in this account on January 1 of this year?
- 4. In (d), what single sum must be deposited in the bank on January 1 of this year?
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Chapter 9 Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Define deferred revenue. Why is it a liability?Ch. 9 - Prob. 9QCh. 9 - Define working capital. How is working capital...
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