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 unequal payments after the acquisition date.Which of the following table values would be used to find the cost of the machine?
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 cash equivalent price of a machine, when payments are made in the future, requires calculating the present value of those future payments. Since the payments are unequal, each payment is treated as a single amount rather than as a series of equal payments (annuity). Therefore, the present value of a single amount table is used for each payment to find their total present value, which represents the cash equivalent price of the machine.

You Have Been Asked to Compute the Cash Equivalent Price