Marigold Corp. financed the purchase of a machine by making payments of $27500 at the end...
Marigold Corp. financed the purchase of a machine by making payments of $27500 at the end of each of five years. The appropriate rate of interest was 8%. The future value of one for five periods at 8% is 1.46933. The future value of an ordinary annuity for five periods at 8% is 5.86660. The present value of an ordinary annuity for five periods at 8% is 3.99271. What was the cost of the machine to Marigold?
Homework Answers
Cost of the machine = Purchase price of machinery x Present value of an ordinary annuity for five periods at 8%
= $27,500 x 3.99271
= $109,800
Therefore, cost of the machine to Marigold = $109,800
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