Question

General accounting questions I have:

1.

Min Co. buys a new machine and agrees to pay for the machine with the following terms. There is no down payment and Min sends a cheque in for $300,000 for each of the next six years. Money is worth 6% per annum and is compounded semi-annually. Min would capitalize this machine at:

The gross amount of the obligation ($1,800,000)

$300,000 (and each year the capitalization would be increased by another $300,000)

The future value of the stream of annuity payments

Some other amount

$0 (you cannot capitalize it until it is fully paid for)

2.

If you borrowed $1,500 for a 5 year period, with a simple interest rate of 10% per annum, the total interest to be paid would be

$1,500

None of the other alternatives are correct

$750

$1,000

$1,250

3.

If you set yourself a goal of investing X amount today, earning interest at 7%, in order to withdraw $10,000 at the end of each year for the next four years, how much is X?

Between $35,000 and $38,000

$33,872

$32,149

$40,000

None of the other alternatives are correct

4.

Martha borrows $50,000 from the Mighty Bank today and the Bank requests her to repay her loan in four equal payments along with 12% interest. Each of the four payments must be paid at the end of the next four years. What is the amount of each payment? Please round to the nearest whole number.

$16,462 plus 12% interest

$38,130 plus 12% interest

$10,462

$10,462 plus 12% interest

$16,462

Answer 1

The answer has been presented in the supporting sheet. For detailed answer reefr to the supporting sheet.