Business, 03.04.2020 19:14 nathanfletcher

On January 1, 2014, Boston Company completed the following transactions (use a 7 percent 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.)

a. Borrowed $115,000 for seven years. Will pay $6,000 interest at the end of each year and repay the $115,000 at the end of the 7th year.

b. Established a plant addition fund of $490,000 to be available at the end of year 8. A single sum that will grow to $490,000 will be deposited on January 1, 2014.

c. Agreed to pay a severance package to a discharged employee. The company will pay $75,000 at the end of the first year, $112,500 at the end of the second year, and $150,000 at the end of the third year.

Required:

(a), determine the present value of the debt.

(b), what single sum amount must the company deposit on January 1, 2014?

(c), determine the present value of this obligation.

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