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**Unformatted text preview: **E6-13Time Diagram:Messier, Inc.PV = ?i = 5%PV - OA = ?123n = 30Formula for the interest payments:PV - OA = $165,000 (15.37245)PV - OA = $2,536,454Formula for the principal:PV = $3,000,000 (0.23138)PV = $694,140The selling price of the bonds is equal to $2,536,454 plus $694,140 equal to $3,230,594PV - OA = R (PVF - OAn,i)PV - OA = $165,000 (PVF - OA30, 5%)PV = FV (PVF n, i)PV = $3,000,000 (PVF30, 5%)Principal$3,000,000 interest282930E6-14Time Diagram:i - 8%R = PV - OA = ?$800,000 $8121516( i )PV - OA $800,000 (6.71008)( ii )Present value of the expected annual pension payments at the beginning of the current year:PV = $5,368,064 (0.31524)PV = $1,692,228FV (PVn, i)(PV - OA n, i)Present value of the expected annual pension payments at the end of the 10thyear:PV - OA = R (PVF - OAn, i)PV - OA = $800,000 (PVF - OA10, 8%)PV - OA = $5,368,064PV = FV (PVF n, i)PV = $5,368,064 (PVF 15, 8%)The company's pension liability (obligation) is $1,692,228.800,000 $800,000 2425P6-3Time Diagram (Bid A):$69,000 i = 9%PV - OA = R = ?$3,000 $3,000 $3,000 $3,000 $69,000 $3,000 1234567n = 9Present value of intial cost 12,000 x 5.75 = $69,000 (incurred today)..12,000 x 5....

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