Calculate the cost of the equipment, where necessary using any of the three methods (tables, financial calculator, or Excel), assuming the note is as follows: (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) 1. 2. 3. An 7% interest-bearing note, with interest due each September 1. A 2% interest-bearing note, with interest due each September 1. A non-interest-bearing note.
Calculate the cost of the equipment, where necessary using any of the three methods (tables, financial calculator, or Excel), assuming the note is as follows: (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) 1. 2. 3. An 7% interest-bearing note, with interest due each September 1. A 2% interest-bearing note, with interest due each September 1. A non-interest-bearing note.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:On September 1, 2023, Cullumber Ltd. purchased equipment for $43,200 by signing a two-year note payable with a face value of
$43,200 due on September 1, 2025. The going rate of interest for this level of risk was 7%. The company has a December 31 year end.
(The tables in this problem are to be used as a reference for this problem.)
Click here to view Table A.2 - PRESENT VALUE OF 1- (PRESENT VALUE OF A SINGLE SUM)
Click here to view Table A.4 - PRESENT VALUE OF AN ORDINARY ANNUITY OF 1
(a)
Your Answer
Calculate the cost of the equipment, where necessary using any of the three methods (tables, financial calculator, or Excel),
assuming the note is as follows: (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.)
1.
2.
3.
1.
2.
Correct Answer (Used)
3.
An 7% interest-bearing note, with interest due each September 1.
A 2% interest-bearing note, with interest due each September 1.
A non-interest-bearing note.
An 7% interest-bearing note
A 2% interest-bearing note
$
A non-interest-bearing note $
Cost of the Equipment
43,200
39,295
37,733
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VIEWStep 3: 2. Calculate cost of equipment when there is a 2% interest bearing note.
VIEWStep 4: 3. Calculate cost of equipment when there is a no interest bearing note
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