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Polo Publishers purchased a multi-color offset press with terms of $65,000 down and a noninterest-bearing note...

Polo Publishers purchased a multi-color offset press with terms of $65,000 down and a noninterest-bearing note requiring payment of $40,000 at the end of each year for five years. The interest rate implicit in the purchase contract is 11%. Polo would record the asset at: Multiple Choice $147,836. $240,234. $105,000. $212,836.

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Answer #1
Cash payment made 65000
Add: Present value of annual payments made 147836 =40000*3.69590
Polo would record the asset at 212836
Option 4 $212,836 is correct
Note: 3.69590 is the present value factor of $1 annuity(n=5,i=11%)
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