Present and future value tables of $1 at 11% are presented below.

-Polo Publishers purchased a multi-color offset press with terms of $50,000 to be paid at the date of purchase, and a noninterest-bearing note requiring payment of $20,000 at the end of each year for five years. The interest rate implicit in the purchase contract is 11%. Polo would record the asset at:
A) $73,918.
B) $123,918.
C) $130,000.
D) $169,560.

Question

Present and future value tables of $1 at 11% are presented below.

-Polo Publishers purchased a multi-color offset press with terms of $50,000 to be paid at the date of purchase, and a noninterest-bearing note requiring payment of $20,000 at the end of each year for five years. The interest rate implicit in the purchase contract is 11%. Polo would record the asset at:
A) $73,918. 
B) $123,918. 
C) $130,000. 
D) $169,560.

Quizplus · Accepted Answer

$50,000 + ($20,000 × 3.69590) = $123,918
*PVA of $1: n = 5; i = 11%

Present and Future Value Tables of $1 at 11% Are