Geogia State University Intermediate Accounting

TRADITIONAL HOMEWORK ITEMS – Spring 2024 – ACT 3391
General Instructions for the Traditional Homework – refer to the instructions for traditional item no. 3.
14. (4 points) On 12-31-21, Austin entered into an agreement that required Austin to pay a supplier $4,000 every year on 12-31 until
12-31-30. The agreement required Austin to make the first annual payment on 12-31-24. Assume the market rate of interest for
Austin is 6%. As of 12-31-21 what was the present value of Austin’s obligation?
15. (3 points) On 12-31-22, Acme entered into an agreement that required Acme to pay someone $5,000 on 12-31-27. Assume the
appropriate market rate of interest for Acme was 8%.
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As of 12-31-22, what was the present value of Acme’s obligation?
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As of 12-31-25, what was the present value of Acme’s obligation?
16. (3 point) On 12-31-20, Austin entered into an agreement that required Austin to pay a supplier $900 every year on 12-31 until 1231-27. Assume the market rate of interest for Austin is 4%.
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Assume the agreement required Austin to make the first annual payment on 12-31-20 and to make the last annual payment
on 12-31-27. As of 12-31-20 what was the present value of Austin’s obligation?
Assume the agreement required Austin to make the first annual payment on 12-31-21 and to make the last annual payment
on 12-31-27. As of 12-31-20 what was the present value of Austin’s obligation?
17. (5 points) On 12-31-20 J entered into an agreement allowing J to collect the following:
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Starting 12-31-21, $500 every 12-31 until 2025.
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On 12-31-26, a one-time collection of $2,500.
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Nothing in 2027
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Starting 12-31-28, $750 every 12-31 until 12-31-37.
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How much total cash will J eventually collect?
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Assume a market interest rate of 2%. As of 12-31-20, what was the present value of J’s receivable?
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