A company purchased equipment and signed a seven-year installment loan at 9% annual interest.The annual payments equal $9,000.The present value factor for an annuity for seven years at 9% is 5.0330.What value for this equipment should be recorded on the company's books on the day the contract is signed?
A)$9,000
B)$5,033
C)$63,000
D)$57,330
E)$45,297

Question

Quizplus · Accepted Answer

The present value of the equipment is calculated by multiplying the annual payment by the present value factor for an annuity: $9,000 * 5.0330 = $45,297.

A Company Purchased Equipment and Signed a Seven-Year Installment Loan