Answered

Find accurate and reliable answers to your questions on IDNLearn.com. Discover detailed and accurate answers to your questions from our knowledgeable and dedicated community members.

Swifty Corporation financed the purchase of a machine by making payments of $20500 at the end of each of five years. The appropriate rate of interest was 12%. The future value of one for five periods at 12% is 1.76234. The future value of an ordinary annuity for five periods at 12% is 6.35285. The present value of an ordinary annuity for five periods at 12% is 3.60478. What was the cost of the machine to Swifty

Sagot :

Kolawole845idn

Answer:

Cost of machine = $73,897.99

Explanation:

The cost of machine to Swifty Corporation the present value pf the ordinary annuity payment of $20,500 per year discounted at the interest rate of 12%.

Note that the annuity is an ordinary annuity because annual  payment  is made at the end of the year.

Present value of ordinary annuity= annuity factor× annual payment

Present value of ordinary annuity = 20,500× 3.60478= $73,897.99

Cost of machine = $73,897.99

We appreciate your presence here. Keep sharing knowledge and helping others find the answers they need. This community is the perfect place to learn together. Thank you for choosing IDNLearn.com. We’re committed to providing accurate answers, so visit us again soon.