Deferred Payment
Alligood Equipment Corporation sold a precision tool machine with computer controls to Kaui Corporation for $400,000 on January 2 and agreed to take payment nine months later on October 2. Assume that the prevailing annual interest rate for such a transaction is 16 percent compounded quarterly.
Note: The following Table on present value may be used where appropriate to solve this problem.
What is the actual sale (purchase) price of the machine tool?