Homework Answers
Payment made initially = $10,000
Annual payment = $10,000
Time period (n) = 10 years
Interest rate (i) = 10%
Present value of cash outflows = Payment made initially + annual cash payment x Present value annuity factor (i%, n)
= 10,000 + 10,000 x Present value annuity factor ( 10%, 10)
= 10,000 + 10,000 x 6.14457
= 10,000+ 61,446
= $71,446
The land reported in the Balance sheet is closest to $71,446
Correct option is d.
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