E9-13 Computing Four Present Value Problems LO9-7 On Janary 1 o\' tis year Sharo
ID: 2786579 • Letter: E
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E9-13 Computing Four Present Value Problems LO9-7 On Janary 1 o' tis year Sharon Conany co pleted te foilowng tansa ons (assume a 8% ann-intmeu ras) eyt $1 Py(11.Baofit and e nouse the appropriate factors) bom the tables provided) a. Bought a delivery truck and agreed to pay 560,500 at the end of theee years b. Renied an office building and was given the option of paying $10,500 at the end of each of the next three years or paying $28,500 immedately d.Decided todepost á sngle sum in the bankrat wil provde 8 equal arnal yearend payments of$40500 aretred employee payments satng December 31 ofths year by deposting a Required 1. What is the oost of the truck that should be recorded at the time of purchase? (Round your answer to nearest whole dollar 3.veat sngo amore mat be deposited inths atmrt on January , oft year?(Round yourwer to nearest whole dollar.) answer to mearest whola dollar) L. What single sum mustl be deposted in the bank on January 1 of this year? (leund your aExplanation / Answer
a Truck should be recorded at Pv of outflow at the end of yr 3 i.e60500/(1.08)^3 48026.85 b Option 1- Three installments Annuity factor(8%,3yrs) 0.73503 Pv of outflows today 10500 x Annuity factor 27059.52 Option 2 - Single installment 28500 Option 1 is viable as less outflow in terms of PV c Assuming annual compounding Compounded value of $1 after 7 years (1.08)^7 1.713824 Amount to be invested today = 91000/1.713824 53097.63 d 8 Annual payments from end of this month $40500 Amount to be invsted = PV of cash flows Annuity Factor for 8 yrs 5.746639 Pv of cash flows due 232738.9 Please provide feedback…. Thanks in advance….:-)
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