On January 1, 20x1, DEF Company purchased a machine for ₱300,000 in exchange for a note. The prevailing note of interest of type is 9%. The new machine was damaged during its installation and the repair cost amounted to ₱30,000. Assume that the machine has no available cash price and that the note is a noninterest bearing requiring four equal annual payments of ₱75,000. The first payment was made on December 31, 20x1, and the others are due annually on December 31. Required: Determine the cost of the machine.
On January 1, 20x1, DEF Company purchased a machine for ₱300,000 in exchange for a note. The prevailing note of interest of type is 9%. The new machine was damaged during its installation and the repair cost amounted to ₱30,000. Assume that the machine has no available cash price and that the note is a noninterest bearing requiring four equal annual payments of ₱75,000. The first payment was made on December 31, 20x1, and the others are due annually on December 31. Required: Determine the cost of the machine.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 20x1, DEF Company purchased a machine for ₱300,000 in exchange for a note. The prevailing note of interest of type is 9%. The new machine was damaged during its installation and the repair cost amounted to ₱30,000. Assume that the machine has no available cash price and that the note is a noninterest bearing requiring four equal annual payments of ₱75,000. The first payment was made on December 31, 20x1, and the others are due annually on December 31.
Required: Determine the cost of the machine. (Round off present value factors to four decimal places.)
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