A machine is purchased by making payments of $18000 at the beginning of each of the...

A machine is purchased by making payments of $18000 at the beginning of each of the next five years. The interest rate was 11%. The future value of an ordinary annuity of 1 for five periods is 6.22780. The present value of an ordinary annuity of 1 for five periods is 3.69590. What was the cost of the machine?

Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $63500 for 15 years and to have a resale value of $123500 at the end of that period. Assume a 10% rate and earnings at year end. The present value of 1 at 10% for 15 periods is 0.23939. The present value of an ordinary annuity at 10% for 15 periods is 7.60608. The future value of 1 at 10% for 15 periods is 4.17725.

On January 2, 2017, Sunland Company wishes to issue $7100000 (par value) of its 6%, 10-year bonds. The bonds pay interest annually on January 1. The current yield rate on such bonds is 11%. Using the interest factors below, compute the amount that Sunland will realize from the sale (issuance) of the bonds.

Present value of 1 at 6% for 10 periods	0.5584
Present value of 1 at 11% for 10 periods	0.3522
Present value of an ordinary annuity at 6% for 10 periods	7.3601
Present value of an ordinary annuity at 11% for 10 periods	5.8892

Expert Solution

1)cost of machine : PVAD 11%,5 *Amount

= 4.10245*18000

= $ 73844 rounded

2)Present value of investment : [PVA 10%,15* ANnual earnings]+ [PVF 10%,15*Resale value]

=[7.60608*63500]+[.23939*123500]

= 482986.08+ 29564.67

=$ 512,550.75

3)Proceeds from issuance :[PVA11%,10* Interest]+[PVF 11%,10* Face value]

= [5.8892*426000]+[.3522*7100000]

= 2508799.2+ 2500620

= $ 5,009,419.20

jeff jeffy answered 2 years ago

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