1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
oee [108]
3 years ago
11

On January 1 of this year, Shannon Company completed the following transactions (assume a 10% annual interest rate): (FV of $1,

PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)
a. Bought a delivery truck and agreed to pay $60,000 at the end of three years.
b. Rented an office building and was given the option of paying $10,000 at the end of each of the next three years or paying $28,000 immediately.
c. Established a savings account by depositing a single amount that will increase to $90,000 at the end of seven years.
d. Decided to deposit a single sum in the bank that will provide 10 equal annual year-end payments of $40,000 to a retired employee (payments starting December 31 of this year).

1. What is the cost of the truck that should be recorded at the time of purchase? (Round your answer to nearest whole dollar.)
2. Which option for the office building results in the lowest present value?
Pay in single installment or Pay in three installments?
3. What single amount must be deposited in this account on January 1 of this year? (Round your answer to nearest whole dollar.)
4. What single sum must be deposited in the bank on January 1 of this year? (Round your answer to nearest whole dollar.)
Business
1 answer:
fredd [130]3 years ago
7 0

Answer:

1. Amount to be paid at the end of three years (A) = $60,000

Rate of interest (r) = 10% = 0.10

Number of years (n) = 3 years.

Cost of truck that should be recorded at the time of purchase = A÷(1+r)n = 60,000÷(1+0.10)3 = 60,000÷1.13 = 60,000÷1.331 = $45,078

2. Annual payment (P) = 10,000

Number of years (n) = 3 years

Rate of interest (r) = 10% = 0.10

Present value of annual payment = P×[1-(1+r)-n]÷r = 10,000×[1-(1+0.10)-3]÷0.10 = 10,000×[1-1.1-3]÷0.10 = 10,000×[1-0.7513]÷0.10 = 10,000×0.2487÷0.10 = $24,870.

Single installment payment is $28,000 and the present value of $10,000 paid annually for 3 years is $24,870, which means annual payment for three years will be the better option because the present value is less than the single installment.

Pay in three installment will be the better option.

3. Amount at the end of 7 years (A) = $90,000

Number of years (n) = 7 years

Rates of interest (r) = 10% = 0.10

Single amount to be deposited in this account on January 1 of this year = A÷(1+r)n = 90,000÷(1+0.10)7 = 90,000÷1.17 = 90,000÷1.9487 = $46,184

4. Annual payment (P) = $40,000

Number of years (n) = 10 years

Rate of interest (r) = 10% = 0.10

Single sum to be deposited in the bank on January 1 of this year = P×[1-(1+r)-n]÷r = 40,000×[1-(1+0.10)-10]÷0.10 = 40,000×[1-1.1-10]÷0.10 = 40,000×[1-0.3855]÷0.10 = 40,000×0.6145÷0.10 = $245782.6842

You might be interested in
Regardless of on whom a tax is levied, sellers face which of the following?
IceJOKER [234]

Answer:

A a decrease in the amount of money they receive

Explanation:

If the seller levies the tax on the customer, the tax will increase the price of a product and in turn decrease the demand for the product. Decreased demand, in turn, will reduce the total revenue.

But if the seller levies the tax on themself, it will not increase the product price but lower the seller revenue directly. Either way, the revenue of the seller will be decreased.

7 0
3 years ago
Thomlin Company forecasts that total overhead for the current year will be $7,584,000 with 158,000 total machine hours. Year to
IRINA_888 [86]

Answer:

(D) $48 per machine hour

Explanation:

The predetermined overhead rate is given by total estimated overhead divided by the total estimated machine hours

Total estimated overhead = $7,584,000

Total estimated machine hours = 158,000 hours

Predetermined rate = $7,584,000 ÷ 158,000 hours = $48 per machine hour

4 0
3 years ago
Read 2 more answers
A company that doesn't just make money but makes a difference in the world and gives back to the community is a company that eng
mote1985 [20]
Engages in ' Corporate Social Responsibly' the money they earn will be given back to society

For example: a shoe factory allows its customer to buy a pair of shoes so the money goes to society the needy. There is trust between the company and customer and the money benefits society
8 0
3 years ago
What percentage of each dollar of sales affected net income given Sales of $120,000; Cost of Goods Sold of $70,000; Operating Ex
Romashka [77]

Answer: 25%

Explanation:

3 0
2 years ago
Which eoc configuration aligns with the on-scene incident?.
g100num [7]

Answer: ICS or ICS-like EOC structure aligns with the on-scene incident organization. Many associations, jurisdictions, and organizations configure their EOCs simply by using the general/standard organizational structure of ICS. It is used either as or by modifying it slightly.

Explanation:

8 0
2 years ago
Other questions:
  • _____ is the total value of all the finished goods and services produced in a country over a certain period of time
    5·1 answer
  • How to find the slope from 2 points
    12·1 answer
  • Acquired $30,000 cash from the issue of common stock. Purchased inventory for $15,000 cash. Sold inventory costing $9,000 for $2
    5·1 answer
  • Which of the following is a law intended to eliminate discrimination in the workplace?
    11·2 answers
  • An inventor in Burginville developed a fantastic new dictation machine that perfectly records speech and turns it into a typed d
    5·2 answers
  • What are some questions you may ask when reevaluating a goal? (Choose all that apply.)
    6·1 answer
  • Camelot Company has estimated the following costs for this year for 50,000 units: Manufacturing Selling and Administrative Varia
    9·1 answer
  • Trả lời câu hỏi “vì sao “ dùng phỏng vấn hay anket
    11·1 answer
  • Looking forward to next year, if Digby’s current cash amount is $17,478 (000) and cash flows from operations next period are unc
    11·1 answer
  • Businesses in the diamond market believe conflict diamonds will be avoided in the future
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!