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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Short Company purchased land by paying $10,000 cash on the purchase date and agreeing to pay $10,000 for each of the next ten years beginning one-year from the purchase date. Short's incremental borrowing rate is 10%. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) The land reported on the balance sheet is closest to: Multiple Choice $100,000. $110,000. Oo oo $71,446. $38,550.
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automobile? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use
appropriate factor(s) from the tables provided. Round "Table
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