Problem
Sandstone Corporation brought a new machine and agreed to pay for it in equal annual installments of $4,000 at the end of each of the next 10 years. Assume an 11% market rate of interest applies to this contract, how much was recorded as the cost of the machine?
11% Interest Table Factors
|
Period
|
Present Value of $1 (Table 6-2)
|
Present Value of an Ordinary Annuity of $1 (Table 6-4)
|
|
6
|
.53464
|
4.23054
|
|
7
|
.48166
|
4.71220
|
|
8
|
.43393
|
5.14612
|
|
9
|
.39092
|
5.53705
|
|
10
|
.35218
|
5.88923
|