Question

On january 1, boston company completed the following transactions (use a 7% annual interest rate for all transactions): (fv of $1, pv of $1, fva of $1, and pva of $1) note: use appropriate factor(s) from the tables provided. promised to pay a fixed amount of $7,200 at the end of each year for seven years and a one-time payment of $117,400 at the end of the 7th year. established a plant remodeling fund of $491,800 to be available at the end of year 8. a single sum that will grow to $491,800 will be deposited on january 1 of this year. agreed to pay a severance package to a discharged employee. the company will pay $76,200 at the end of the first year, $113,700 at the end of the second year, and $151,200 at the end of the third year. purchased a $176,000 machine on january 1 of this year for $35,200 cash. a five-year note is signed for the balance. the note will be paid in five equal year-end payments starting on december 31 of this year.

Answer 1

The student is asking about the calculations of present and future values of different monetary transactions, which involves using formulas for the time value of money. These calculations are essential for financial planning and analysis.

Step-by-step explanation:

The question at hand is concerned with various financial transactions and calculations related to present value and future value, based on different scenarios like annuities, bonds, and loans. Specifically, the question involves finding the present value (PV), future value (FV), present value annuity (PVA), and future value annuity (FVA) of certain cash flows given an annual interest rate. To accurately respond to each scenario described in the question, one would apply financial mathematics concepts and utilize appropriate present value and future value formulas or tables to determine the values needed.

Example Calculations

• To find the future value that a single sum will grow to, the formula used is FV = PV × (1 + Interest rate)number of years t.
• For an annuity, the future value annuity can be calculated using an FVA of $1 table and the present value annuity using a PVA of $1 table, taking into account the frequency and amount of payments.
• If considering the purchase of a bond one year before maturity, one would adjust the price paid for the bond based on the current market interest rate.

Each scenario has its unique set of details that must be carefully evaluated to perform the necessary financial calculations. These include the time value of money, the number of periods, the interest rate, and the size and timing of cash flows.