Homework Answers
Annual payment = $85,000
Time period (n) = 5 years
Discount rate (i%) = 6%
Present value of annual payments = Annual payment x Present value annuity factor (i%, n)
= 85,000 x Present value annuity factor (6%, 5)
= 85,000 x 4.21236
= $358,051
Hence, equipment will be recorded at $358,051
Second option is the correct option.
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