Question

part C and D only please!

apter 9i Saved On January 1 of this year, Shannon Company completed the following transactions (assume a 9% annual interest rate): (EV of $1, PV of $1. EVA of $1 and PVA of $1) (Use the appropriate factor(s) from the tables provided.) a. Bought a delivery truck and agreed to pay $60,400 at the end of three years. b. Rented an office building and was given the option of paying $10,400 at the end of each of the next three years or paying $28,400 immediately c. Established a savings account by depositing a single amount that will increase to $90,800 at the end of seven years. d. Decided to deposit a single sum in the bank that will provide 9 equal annual year-end payments of $40,400 to a retired employee (payments starting December 31 of this year) Required: a.What is the cost of the truck that should be recorded at the time of purchase? (Round your answer to nearest whole dollar.) Cost of the truck S 46,640 b. Which option for the office building results in the lowest present value? Pay in three installments Pay in single installment c. What single amount must be deposited in this account on January 1 of this year? (Round your answer to nearest whole dollar.) Amount to deposit d. What single sum must be deposited in the bank on January 1 of this year? (Round your enswer to nearest whole dollar.) Next >

Answer 1

ANSWER

c	Amount	PV value at end of 7 years@9%	Total
	90,800.00	90,800*.547	49,667.6
d	Amount	PV value at end of each years@9%	Total
1	40,400.00	0.92	37,168
2	40,400.00	0.84	33936
3	40,400.00	0.77	31108
4	40,400.00	0.71	28684
5	40,400.00	0.65	26260
6	40,400.00	0.60	24240
7	40,400.00	0.55	22220
8	40,400.00	0.50	20200
9	40,400.00	0.46	18584
			242,400
or
	40,400.00	40400*5.995	242,198

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