1. A company purchased some large machine on a deferred payment plan. The contract calls for $40,000 down on January 1 and $40,000 at the beginning of each of the next 4 years. There is no stated interest rate in the contract and there is no established exchange price for the machinery. What should be recorded as the cost of the machinery?
2. On September 1, Year 1, a company purchased new machine that it does not have to pay for until September 1, Year 3. The total payment on September 1, Year 3, will include both principal and interest. Assuming interest at a 10% rate, the costof the machine will be the total payment multiplied by the time value of money factor.
3. On july 1, Goblette Company sold some machiner to another company. The two companies entered into an installment sales contract at a predetermined interest rate. The contract required five equal annual payments with the first payment due on July 1, the date of sale. What present value concept is appropriate for this situation?
4.For whcih of the following transaction would the use of present value of an annuity due concept be appropriate in calculating the present value of the asset obtained or liability owed at the date of incurrence?
5. Risoner company plans to purchase a machine with the following conditions
- Purchase Price: 300,000
- The down payment = 10% of the purchase price with remained finance at an annual interest rate of 16%
- The financing period is 8 years with equal annual payment made every year.
- The present value of annuity of $1 per year for 8 years at 16% mis 4.3436
- The present Value of $1 due at the end of 8 year at 16% is .3050
The annual payment (rounded to the nearest dollar) is:
8. Jarvis want to invest equal semiannual payments in order to have $10,000 at the end of 20 years. Assuming that jarvis will earn interest at annual rate of ^% compounded seminnually, how would the periodic payment be calculated?
9. An actuary has determined the JayKay Company should have $90 million accummulated in a fund 20 years from now to be able to meet in pension obligations. An interest 8% is considered appropriate for all pension fun calculation involving an interest componeny. JAykay wishes to calculate how much it should contribute at the end of eachof the next 20 years for the pension fund to have its required balance in 20 years. Which set of instruction correctly describes the procedures necessary to compute the annual amount the company should contribute to the fund.