Explanation Annuity: An annuity is referred as a sequence of payment of fixed amount of cash flows that occurs over the equal intervals of time. Cash flow occurs during the first day of each time period is known as an annuity due , whereas cash flow occurs during the last day of each time period is known as an ordinary annuity . First, convert the future receipt of $25,000 to present value as on January 1, 2019. PV=FV× ( p n=10,i=12% ) = $ 25 , 000 × 0.321973 = $ 8 , 049.33 Hence, the present value of future trust receipt as on January 1, 2019 is $8,049.33. Factor 0.321973 is taken from the Present value of $1 table (Table 3 at the end of the time value money module), where n=10, i=12%. Now, calculate the present value of total annual payments, using present value ordinary annuity formula (because future payments are made in installment). PV o = Present value of Loan − Present value of future recepits from trust =$40,000 − $ 8 , 049

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN: 9781337788281

Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher: Cengage Learning

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Chapter M, Problem 9E

To determine

Determine the equal annual payment.

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Chapter M Solutions

Intermediate Accounting: Reporting And Analysis

Ch. M - Explain interest.Ch. M - Prob. 2GI Ch. M - Prob. 3GI Ch. M - Prob. 4GI Ch. M - Prob. 5GI Ch. M - Prob. 6GI Ch. M - Prob. 7GI Ch. M - Prob. 8GI Ch. M - Prob. 9GI Ch. M - Prob. 10GI

Ch. M - Prob. 11GI Ch. M - Prob. 12GI Ch. M - Prob. 13GI Ch. M - Prob. 14GI Ch. M - Prob. 15GI Ch. M - Prob. 16GI Ch. M - Prob. 17GI Ch. M - Prob. 18GI Ch. M - Prob. 19GI Ch. M - Prob. 20GI Ch. M - Prob. 21GI Ch. M - Prob. 22GI Ch. M - What is a deferred ordinary annuity? How does it...Ch. M - Prob. 24GI Ch. M - Prob. 25GI Ch. M - Give two examples of assets and three examples of...Ch. M - Prob. 1MC Ch. M - Prob. 2MC Ch. M - Refer to the present value table information on...Ch. M - Refer to the present value table information on...Ch. M - On May 1, 2019, a company purchased a new machine...Ch. M - An office equipment representative has a machine...Ch. M - Prob. 7MC Ch. M - For which of the following transactions would the...Ch. M - On July 1, 2019, James Rago signed an agreement to...Ch. M - On January 1, 2019, Ken Company sold a machine to...Ch. M - Prob. 1RE Ch. M - Based on the following annual interest rates, what...Ch. M - Prob. 3RE Ch. M - Prob. 4RE Ch. M - Next Level Potter wishes to deposit a sum that at...Ch. M - Prob. 6RE Ch. M - Prob. 7RE Ch. M - Prob. 8RE Ch. M - Prob. 9RE Ch. M - If 90,000 is invested in a fund on December 31,...Ch. M - Samuel Ames owes 20,000 to a friend. He wants to...Ch. M - Prob. 12RE Ch. M - Prob. 13RE Ch. M - Prob. 14RE Ch. M - Prob. 1E Ch. M - Future Value Hugh Colson deposited 20,000 in a...Ch. M - Prob. 3E Ch. M - Future Value of Annuity Using appropriate tables,...Ch. M - Prob. 5E Ch. M - Prob. 6E Ch. M - Prob. 7E Ch. M - Cash Flow Amounts R. Lee Rouse borrows 10,000 that...Ch. M - Prob. 9E Ch. M - Amount of an Annuity John Goodheart wishes to...Ch. M - Prob. 11E Ch. M - Prob. 12E Ch. M - Present Value of Leased Asset On January 1, 2019,...Ch. M - Amount of an Annuity Beginning December 31, 2023,...Ch. M - Prob. 1P Ch. M - Prob. 2P Ch. M - Prob. 3P Ch. M - Determining Loan Repayments Jerry Rockness needs...Ch. M - Prob. 5P Ch. M - Prob. 6P Ch. M - Value of an Annuity Using the appropriate tables,...Ch. M - Serial Installments; Amounts Applicable to...Ch. M - Prob. 9P Ch. M - Comprehensive Part a. Reproduced in the following...Ch. M - Prob. 11P Ch. M - Present Value of an Annuity John Joshua wants to...Ch. M - Present Value of an Annuity Ralph Benke wants to...Ch. M - Compound Interest Issues You are given the...Ch. M - Cash Flow Amounts On January 1, 2019, Philip...Ch. M - Prob. 16P Ch. M - Comprehensive The following are three independent...Ch. M - Prob. 18P Ch. M - Asset Purchase Price BWP Inc. is considering the...Ch. M - Prob. 1C Ch. M - Prob. 2C Ch. M - Prob. 3C Ch. M - Prob. 4C Ch. M - Prob. 5C

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