Problem 1: Present value of an investment in equipment.
Find the present value of an investment in equipment if it is expected to provide annual savings of $10,000 for 10 years and to have a resale value of $25,000 at the end of that period. Assume an interest rate of 9% and that savings are realized at year end.
Problem 2: Future value of an annuity due.
If $4,000 is deposited annually starting on January 1, 2007 and it earns 9%, how much will accumulate by December 31, 2016?
Problem 3: Calculations for statement of cash flows.
Vinson Co. sold a machine that cost $74,000 and had a book value of $44,000 for $50,000. Data from Vinson's comparative balance sheets are:
12/31/08 12/31/07
Machinery $800,000 $690,000
Accumulated depreciation 190,000 136,000
Instructions:
What four items should be shown on a statement of cash flows (indirect method) from this information? Show your calculations.