We need to equate the total payments to the total obligations due at the end of yearthree. Debts The values of the R780 and R7 000 debts must be moved to the end of year three. For the R780 debt The future value is = P (1 + R) T S = 780 (1 + 0.11) 1 S = 865.80 For the R7 000 debt The value of the R7 000 debt at the end of year three is = P (1 + R) -T S = 7000 (1 + 0.11) -1 S = R6 306.31 Payments There are two payments, namely R1 300 at the end of year one and R x at the end ofyear three. For the R1 300 payment The future value isS = P (1 + R) T S = 1300 (1 + 0.11) 2 S = R1 601.73Total payments = Total obligations1601.73 + x = 865.80 + 6306.611601.73 + x = 7172.11 x = 7172.11 – 1601.73x = R5 570.38

Compute the future value of an annuity in which quarterly payments (4 each year) of $185 are made for 13 years at an annual rate of 3.6%.

cpa exam question:

On December 31, Year One, the city ofArishma signs a five-year lease on a fire truck. Payments are$50,000 per year. The lease qualifies as a capital lease. Thepresent value of these future lease payments is $208,000. Nopayment was made before the end of Year One. This transaction isrecorded in the General Fund. Which of the following is correctlyreported on the fund financial statements for December 31, YearOne, and the year then ended?

a. A liability of$208,000.

b. An asset of$208,000.

c. Anexpenditure of $208,000.

d. Depreciationexpense of $41,600.

Popeye's Fried Chicken just took out an 8 percent interest-onlyloan of $50,000 for three years. Payments are to be made at the endof each year. What is the amount of the payment that will be due atthe end of year 3?