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Computing Present Values (AP9-10) On January 1, Boston Company completed the following transactions (use a 7 percent annual interest rate for all transactions): a. Promised to pay a fixed amount of $6,000 at the end of each year for seven years and a one-time payment of $115,000 at the end of the 7 th year. b. Established a plant remodeling fund of $490,000 to be available at the end of Year 8. A single sum that will grow to $490,000 will be deposited on January 1 of this year. c. Agreed to pay a severance package to a discharged employee. The company will pay $75,000 at the end of the first year, $112,500 at the end of the second year, and $150,000 at the end of the third year. d. Purchased a $170,000 machine on January 1 of this year for $34,000 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. Required (show computations and round to the nearest dollar): 1. In transaction (a), determine the present value of the debt. 2. In transaction (b), what single sum amount must the company deposit on January 1 of this year? What is the total amount of interest revenue that will be earned? 3. In transaction (c), determine the present value of this obligation. 4. In transaction (d), what is the amount of each of the equal annual payments that will be paid on the note? What is the total amount of interest expense that will be incurred

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