Question

US Man Acctg 302 Geli aus weten Carp a conndring the purchle of a medie wenon expects to use the mache e ured 13-31-2024 and has fund a vendor who w agree to the folomng terms for the On 12-31 2024, Weston expects to Westen uses a 9% dscount rate for a·investment decisions, what wil it cost Weston (in TM terms) to purchase (and use) the machine? Round each year's computation to whole dollars as

Answer 1

Cost of machine is present value of future payment less present value of salvage value
i	ii	iii	iv=ii+iii	v	vi=v*iv
Year	Payment	Salvage value	Net payment	PVIF @9%	present value
0	-12000		-12000	1	$      (12,000)
1	-9000		-9000	0.917431	$        (8,257)
2	-9000		-9000	0.84168	$        (7,575)
3	-9000		-9000	0.772183	$        (6,950)
4	-9000		-9000	0.708425	$        (6,376)
5	-9000		-9000	0.649931	$        (5,849)
6	-9000		-9000	0.596267	$        (5,366)
7	-9000	5500	-3500	0.547034	$        (1,915)
					$      (54,288)
therefore cost of machine =				54288