how do u work this problem out

Chapter 6 Homework instructions | help

Johnstone Company is facing several decisions regarding investing and financing activities. Address each

decision independently. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate

factor(s) from the tables provided.)

1. On June 30, 2013, the Johnstone Company purchased equipment from Genovese Corp. Johnstone

agreed to pay Genovese $12,000 on the purchase date and the balance in six annual installments of

$10,000 on each June 30 beginning June 30, 2014. Assuming that an interest rate of 12% properly

reflects the time value of money in this situation, at what amount should Johnstone value the

equipment?

Table values are based on:

n =

i =

Cash Flow Amount Present Value

Installments

Down Payment

Value of the equipment

2. Johnstone needs to accumulate sufficient funds to pay a $420,000 debt that comes due on December

31, 2018. The company will accumulate the funds by making five equal annual deposits to an account

paying 8% interest compounded annually. Determine the required annual deposit if the first deposit is

made on December 31, 2013.

Table or calculator function:

Future Value:

n =

i =

Deposit:

3. On January 1, 2013, Johnstone leased an office building. Terms of the lease require Johnstone to make

20 annual lease payments of $122,000 beginning on January 1, 2013. A 12% interest rate is implicit in

the lease agreement. At what amount should Johnstone record the lease liability on January 1, 2013,

before any lease payments are made?

Intermediate Accounting: Fall 2013 TR 7pm Bianca Dillon10/10/13 Chapter 6Homework

ezto.mhecloud.mcgraw-hill.com/hm.tpx 2/2

Table or calculator function:

Payment:

n =

i =

Liability:

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