The Following Table Values Are Provided for Use in Solving

question 15

Essay

The following table values are provided for use in solving the following independent problems (show computations): n = 5 $$\begin{array} { | l | r | r | r | } \hline \text { Value } & 6 \% & 7 \% & 8 \% \\\hline \text { Future value of } \$ 1 & 1.3382 & 1.4026 & 1.4693 \\\hline \text { Present value of } \$ 1 & .7473 & .7130 & .6806 \\\hline \text { Future value of annuity of } \$ 1 & 5.6371 & 5.7507 & 5.8666 \\\hline \text { Present value of } \$ 1 ^ { * } & 4.2124 & 4.1002 & 3.9927 \\\hline\end{array}$$ *Ordinary annuity
A. Company A deposited $20,000 in a savings account on January 1, 20X1 that will accumulate 6% interest each December 21. 1. What will be the fund balance at the end of Year 5 2. How much interest will be earned by the end of Y ear 5?
B. Company B needs to accumulate a $50,000 fund by making five equal annual deposits. Assuming a 7% interest accumulation, how much must be deposited at the end of the year?
C. Company C has new machine that has an estimated life of five years and a $5,000 residual value. Assuming an 8% interest rate, what is the present value of the estimated residual value?
D. Company D owes a $50,000 debt that is now due (January 1, 20X1). Arrangements have been made to pay it off in five equal annual installments, starting December 31, 20X1 (an ordinary annuity situation).
1. Assuming 8% interest, how much will the annual payment be?
2. Give the entry for Company D above for the first payment on December 31, 20X1 on the note payable.

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Definitions:

Depreciation

A method of allocating the cost of a tangible asset over its useful life.

Comparative Income Statement

A financial statement that compares income, expenses, and net income over different periods, helping to identify trends and assess performance.

Variable Cost

A cost that varies with the level of output or activity, such as raw materials, labor, and utility expenses.