Answered: present value of an ordinary annuity

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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Question

For which of the following transactions would the use of the present value of an ordinary annuity concept be appropriate in calculating the present value of the asset obtained or the liability owed at the date of incurrence?

Group of answer choices

1)A capital lease is entered into with the initial lease payment due one month subsequent to the signing of the lease agreement.

2)A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement.

3)A ten-year 8% bond is issued on January 2 with interest payable semiannually on January 2 and July 1 yielding 7%.

4)A ten-year 8% bond is issued on January 2 with interest payable semiannually on January 2 and July 1 yielding 9%.

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