Anxious Company acquired two items of machinery. On December 31, 2020, Anxious Company purchased a machine for non-interest bearing note requiring ten payments of P500,000. The first payment was made on December 31, 2021, and the others are due annually on December 31. The prevailing rate of interest for this type of note at date of issuance was 12%. The present value of ordinary annuity of 1 @ 12% is 5.33 for nine periods and 5.65 for ten periods. On December 31, 2020, Anxious Company acquired used machinery by issuing the seller a two-year, noninterest bearing note for P3,000,000. In recent borrowing, the entity has paid a 12% interest for this type of note. The present value of 1 @ 12% for 2 years is 0.80 and the present value of an ordinary annuity of 1 @ 12% for 2 years is 1.69. What is the total cost of machiery?
Anxious Company acquired two items of machinery. On December 31, 2020, Anxious Company purchased a machine for non-interest bearing note requiring ten payments of P500,000. The first payment was made on December 31, 2021, and the others are due annually on December 31. The prevailing rate of interest for this type of note at date of issuance was 12%. The present value of ordinary annuity of 1 @ 12% is 5.33 for nine periods and 5.65 for ten periods. On December 31, 2020, Anxious Company acquired used machinery by issuing the seller a two-year, noninterest bearing note for P3,000,000. In recent borrowing, the entity has paid a 12% interest for this type of note. The present value of 1 @ 12% for 2 years is 0.80 and the present value of an ordinary annuity of 1 @ 12% for 2 years is 1.69. What is the total cost of machiery?
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