50.1K

Verified Solution

Link Copied!

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.)

1. Promised to pay a fixed amount of $6,400 at the end of each year for seven years and a one-time payment of $115,800 at the end of the 7th year.
2. Established a plant remodeling fund of $490,600 to be available at the end of Year 8. A single sum that will grow to $490,600 will be deposited on January 1 of this year.
3. Agreed to pay a severance package to a discharged employee. The company will pay $75,400 at the end of the first year, $112,900 at the end of the second year, and $150,400 at the end of the third year.
4. Purchased a $172,000 machine on January 1 of this year for $34,400 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.

4-a. 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.)

Annual Payment ______

4-b. What is the total amount of interest expense that will be incurred? (Round your answer to nearest whole dollar.)

Interest Expense ______

Answer & Explanation Solved by verified expert

See Answer