Rusty Corporation purchased a rust-inhibiting machine by paying $50,000 cash on the purchase date and agreeing to pay $10,000 every three months during the next two years.The first payment is due three months after the purchase date.Rusty's incremental borrowing rate is 8%.(FV of $1,PV of $1,FVA of $1,and PVA of $1)(Use the appropriate factor(s)from the tables provided. )
-The machine reported on the balance sheet as of the purchase date is closest to:
A)$123,255.
B)$130,000.
C)$80,000.
D)$73,255.

Question

Rusty Corporation purchased a rust-inhibiting machine by paying $50,000 cash on the purchase date and agreeing to pay $10,000 every three months during the next two years.The first payment is due three months after the purchase date.Rusty's incremental borrowing rate is 8%.(FV of $1,PV of $1,FVA of $1,and PVA of $1)(Use the appropriate factor(s)from the tables provided. ) 
-The machine reported on the balance sheet as of the purchase date is closest to:
A)$123,255.
B)$130,000.
C)$80,000.
D)$73,255.

Quizplus · Accepted Answer

The present value of the payments is $123,255.

Rusty Corporation Purchased a Rust-Inhibiting Machine by Paying $50,000 Cash