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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Aztec Company purchased a new machine by signing a note under which it agreed to make a down payment at time of purchase and then make subsequent annual payments at the end of each year for the number of years indicated in the table below. $3,000 $3,000 Down payment required Subsequent annual payments Number of annual payments 8. Annual interest rate 6% Which one of the following statements is correct with respect to the above situation? Multiple Choice If the number of "subsequent annual" payments given in the table is increased, with all other information staying the same, the recorded purchase price would be less. If the interest rate is as given in the table but interest is being compounded quarterly rather than annually the recorded purchase price would be less. If the interest rate is less than that stated in the table the recorded purchase price would be less The amount of Interest pald over the life of the note is equal to the 'subsequent annual payment" amount times the "number of annual payments" less the recorded purchase price.
Transcribed Image Text:Aztec Company purchased a new machine by signing a note under which it agreed to make a down payment at time of purchase and then make subsequent annual payments at the end of each year for the number of years indicated in the table below. $3,000 $3,000 Down payment required Subsequent annual payments Number of annual payments 8. Annual interest rate 6% Which one of the following statements is correct with respect to the above situation? Multiple Choice If the number of "subsequent annual" payments given in the table is increased, with all other information staying the same, the recorded purchase price would be less. If the interest rate is as given in the table but interest is being compounded quarterly rather than annually the recorded purchase price would be less. If the interest rate is less than that stated in the table the recorded purchase price would be less The amount of Interest pald over the life of the note is equal to the 'subsequent annual payment" amount times the "number of annual payments" less the recorded purchase price.
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