Solution: The answer is $10,238.
Reason:
1)Interest expenses is calculated on present value of future payments
2) In this question, it is given that there is an initial payment of $20,000 and 4 equal installment of $30,000 will be paid in 4 years time.
3) Interest expense = ( Annual Installments * PVA of $1 for 4 years) * 11%
( $30,000 * 3.10245)* 11% = $10,238 Approx
Remaining options are not correct.
Present and future value tables of $1 at 11% are presented below. PV of $1 FV of $1 PVA of $1 FVA of $1 1 0.90090...
Present and future value tables of $1 at 11% are presented below. PV of $1 FV of $1 PVA of $1 FVA of $1 1 0.90090 1.11000 0.90090 1.0000 2 0.81162 1.23210 1.71252 2.1100 3 0.73119 1.36763 2.44371 3.3421 4 0.65873 1.51807 3.10245 4.7097 5 0.59345 1.68506 3.69590 6.2278 6 0.53464 1.87041 4.23054 7.9129 Spielberg Inc. signed a $150,000 noninterest-bearing note due in two years from a production company eager to do business. Comparable borrowings have carried an 11% interest...
Present and future value tables of 1 at 11% are presented below. PV of $1 FV of $1 PVA of $1 FVA of $1 1 0.90090 1.11000 0.90090 1.0000 2 0.81162 1.23210 1.71252 2.1100 3 0.73119 1.36763 2.44371 3.3421 4 0.65873 1.51807 3.10245 4.7097 5 0.59345 1.68506 3.69590 6.2278 6 0.53464 1.87041 4.23054 7.9129 Polo Publishers purchased a multi-color offset press with terms of $80,000 down and a noninterest-bearing note requiring payment of $60,000 at the end of each year...
Present and future value tables of $1 at 11% are presented below. 1 2 3 PV of $1 FV of $1 PVA of $1 EVA of $1 8.98e90 1.11000 0.90090 1.000e 0.81162 1.23210 1.71252 2.110e 0.73119 1.36763 2.44371 3.3421 0.65873 1.51807 3.10245 4.7097 3.59345 1.68506 3.69590 6.2278 0.53464 1.87841 4.23854 7.9129 4 5 6 On October 1, 2021, Justine Company purchased equipment from Napa Inc. in exchange for a noninterest-bearing note payable in two equal annual payments of $630,000, beginning...
Present and future value tables of $1 at 3% are presented below: N FV $1 PV $1 FVA $1 PVA $1 FVAD $1 PVAD $1 1 1.03000 0.97087 1.0000 0.97087 1.0300 1.00000 2 1.06090 0.94260 2.0300 1.91347 2.0909 1.97087 3 1.09273 0.91514 3.0909 2.82861 3.1836 2.91347 4 1.12551 0.88849 4.1836 3.71710 4.3091 3.82861 5 1.15927 0.86261 5.3091 4.57971 5.4684 4.71710 6 1.19405 0.83748 6.4684 5.41719 6.6625 5.57971 7 1.22987 0.81309 7.6625 6.23028 7.8923 6.41719 8 1.26677 0.78941 8.8923 7.01969 9.1591...
Present and future value tables of $1 at 3% are presented below: N FV $1 PV $1 FVA $1 PVA $1 FVAD $1 PVAD $1 1 1.03000 0.97087 1.0000 0.97087 1.0300 1.00000 2 1.06090 0.94260 2.0300 1.91347 2.0909 1.97087 3 1.09273 0.91514 3.0909 2.82861 3.1836 2.91347 4 1.12551 0.88849 4.1836 3.71710 4.3091 3.82861 5 1.15927 0.86261 5.3091 4.57971 5.4684 4.71710 6 1.19405 0.83748 6.4684 5.41719 6.6625 5.57971 7 1.22987 0.81309 7.6625 6.23028 7.8923 6.41719 8 1.26677 0.78941 8.8923 7.01969 9.1591...
#5
#7
Present Value of Bonds Payable; Premium Moss Co. issued $280,000 of five-year, 11% bonds, with interest payable semiannually, at a market (effective) interest rate of 10%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. Exhibit 5 Present Value of $1 at Compound Interest 10% 0.90909 Periods 1 2 3 4 5 6 7 4% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0.75992 0.73069...
Present Value of Bonds Payable; Premium Moss Co. issued $710,000 of four-year, 12% bonds, with interest payable semiannually, at a market (effective) interest rate of 11%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. $ Exhibit 5 Present Value of $1 at Compound Interest 5% 572% 7% 10% Periods 1 2 3 4 4% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0.75992 0.73069 0.70259...
Present Value of Bonds Payable; Premium Moss Co. issued $480,000 of five-year, 11% bonds, with interest payable semiannually, at a market (effective) interest rate of 10%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. Exhibit 5 Present Value of $1 at Compound Interest Periods NMONO 4% 47% 0.96154 0.956940 0.92456 0.915730 0.88900 0.876300 0.85480 0.838560 0.82193 0.802450 0.79031 0.767900 0.75992 0.734830 0.73069 0.703190 0.702590.672900...
TABLE PV.2 Present Value of an Annuity of 1 PV = 1- (40 2/½ % (n) Periods 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0.97087 0.94340 0.90090 1 0.98039 0.97561 0.96154 0.95238 0.93458 0.92593 0.91743 0.90909 0.89286 0.86957 1.71252 2. 1.94156 1.92742 1.91347 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.69005 1.62571 2.85602 2.77509 2.72325 2.53130 2.44371 3 2.88388 2.82861 2.67301 2.62432 2.57710 2.48685 2.40183 2.28323 3.80773 2.85498 4 3.76197 3,71710 3,62990 3,54595 3,46511 3.38721...
PV = TABLE 2 Present Value of $1 $1 (1+1)" wi 1.0% 1 0.99010 2 0.98030 3 0.97059 4 0.96098 5 0.95147 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.97066 0.96117 0.95181 0.94260 0.93351 0.92456 0.95632 0.94232 0.92860 0.91514 0.90194 0.88900 0.94218 0.92385 0.90595 0.88849 0.87144 0.85480 0.92826 0.90573 0.88385 0.86261 0.84197 0.82193 4.5% 5.0% 5.5% 6.0% 7.0% 0.95694 0.95238 0.94787 0.94340 0.93458 0.91573 0.90703 0.89845 0.89000 0.87344 0.87630 0.86384 0.85161 0.83962 0.81630 0.83856 0.82270...