Question

Concord Corporation financed the purchase of a machine by making payments of $28000 at the end of each of five years. The appropriate rate of interest was 8%. The future value of one for five periods at 8% is 1.46933. The future value of an ordinary annuity for five periods at 8% is 5.86660. The present value of an ordinary annuity for five periods at 8% is 3.99271. What was the cost of the machine to Concord

Answer 1

$111,795.60

Step-by-step explanation:

The cost of the machine is the present value of its annual payment of $28,000.

The present value is the annual payment multiplied by the present value of an ordinary annuity for five periods at 8% which is 3.99271 as computed thus

cost of machine=$28000*3.9927

cost machine=$111,795.60