4. An annuity of R1000 per annum from 1984 to 1988 inclusive, and R1200 per annum from 1989 to 1993 Inclusive, is to be paid in equal half-yearly instalments on the 30th June and 31st December of each year. An intending purchaser of the annuity at 1st January, 1978 wishes to realize an effective rate of interest of 5% per annum on the whole of his investment, and to replace his capital by the end of 1993 by a level sinking fund to accumulate at an effective rate of Interest of 4% per annum. What price should he pay? 9

4. An annuity of R1000 per annum from 1984 to 1988 inclusive, and R1200 per annum from 1989 to 1993 Inclusive, is to be paid in equal half-yearly instalments on the 30th June and 31st December of each year. An intending purchaser of the annuity at 1st January, 1978 wishes to realize an effective rate of interest of 5% per annum on the whole of his investment, and to replace his capital by the end of 1993 by a level sinking fund to accumulate at an effective rate of Interest of 4% per annum. What price should he pay? 9

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 3MC: Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of...

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2. Jeanneth company bought a new machine and agreed to pay in equal annual installment of P300,000 at the end of each of the next 5 years. The prevailing interest rate for this type of transaction is 12%. The rpesent value of an ordinary annuity of 1 at 12% for five periods is 3.60. The future amount of an ordinary annuity of 1 at 12% for five periods is 6.35. The present value of P1 at 12% for five periods is 0.567. What is the interest expense for the first year?
a) Find the present value of a twenty-year temporary life annuity issued to (45) which provides for annual payments beginning at once with a payment of 3,000USD and increasing by 200USD each year until 5,000USD is reached, after which the payments decrease by 100USD annually for the remainder of the term.
Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of 5,000 at the end of each of the next 5 years. Assume a prevailing interest rate of 15%. The present value of an ordinary annuity of 1 at 15% for 5 periods is 3.35. The future amount of an ordinary annuity of 1 at 15% for 5 periods is 6.74. The present value of 1 at 15% for 5 periods is 0.5. How much should Electro record as the cost of the machine? a. 12,500 b. 16,750 c. 25,000 d. 33,700
in equal annual installment of P600,000 at the end of each of Joshua Company bought a new machine and agreed to pay in equal annual installment of P600,000 at the end of each of the next five years. The prevailing interest rate for this type of transaction is 12%. The present value of an ordinary annuity of 1 at 12% for five periods is 3.60. The future amount of an ordinary annuity of i at 12% for five periods is 6.35. The present value of 1 at 12% for five periods is 0.567. 1. What amount should be reported as note payable if financial statements were prepared today? a. 1,700,000 b. 2,160,000 c. 3,000,000 d. 3,810,000 2. What is the interest expense for the first year? a. 259,200 b. 187,200 c. 360,000 d. 457,200
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Mr. Espinoza's debt of P160,000 is amortized by making equal payments at the end of every three months for six years with 4.3% interest rate compounded quarterly. How much is the quarterly payment? Construct an amortization schedule. How much will Mr. Espinoza pay after the term? Do you think that the total amount paid is fair given the total interest and the term of the annuity? Why or why not? Explain in your own words.
Janess company bought a new machine and agreed to pay in equal annual installment of P300,000 at the end of each of the next 5 years. The prevailing interest rate for this type of transaction is 12%. The rpesent value of an ordinary annuity of 1 at 12% for five periods is 3.60. The future amount of an ordinary annuity of 1 at 12% for five periods is 6.35. The present value of P1 at 12% for five periods is 0.567. What amount should be reported as note payable if financial statements were prepared today?
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Find the present value of an ordinary annuity whose periodic payment of P15,000.00 is payable at the end each 6 months for 10 years at 8% compounded semi-annually. *