On May 1, 2014, a company purchased a new machine which it does not have to pay for until May 1, 2016. The total payment on May 1, 2016 will include both principal and interest. Assuming interest at a 10% rate, the cost of the machine would be the total payment multiplied by what time value of money factor?
A) Future value of annuity of 1
B) Future value of 1
C) Present value of annuity of 1
D) Present value of 1

Question

Quizplus · Accepted Answer

The correct answer is the present value of 1, as this factor is used to determine the current worth of a payment to be made in the future, taking into account a specific interest rate over a certain period.

On May 1, 2014, a Company Purchased a New Machine