You have been asked to compute the cash equivalent price of a machine assuming the cost (including principal and interest) is to be paid in two equal payments after the acquisition date. What is the interest concept that best describes this application?
A) Present value of a single amount.
B) Present value of an annuity.
C) Future value of a single amount.
D) Future value of an annuity.

Question

Quizplus · Accepted Answer

The correct concept is the present value of an annuity, as it involves calculating the current worth of a series of equal payments (in this case, two equal payments for the machine) to be made in the future.

You Have Been Asked to Compute the Cash Equivalent Price