Indigo Corporation purchased a special tractor on December 31, 2017. The purchase agreement stipulated that Indigo...
Indigo Corporation purchased a special tractor on December 31, 2017. The purchase agreement stipulated that Indigo should pay $21,440 at the time of purchase and $4,920 at the end of each of the next 8 years. The tractor should be recorded on December 31, 2017, at what amount, assuming an appropriate interest rate of 12%?
Homework Answers
Present value=Cash flow*Present value of discounting factor(rate%,time period)
=21,440+4,920/1.12+4,920/1.12^2+4,920/1.12^3+4,920/1.12^4+4,920/1.12^5+4,920/1.12^6+4,920/1.12^7+4,920/1.12^8
which is equal to
=$45880.79(Approx).
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