Question 16

Use the following 7% interest factors.

Present Value of Future Value of

Ordinary Annuity Ordinary Annuity

7 periods 5.38929 8.65402

8 periods 5.9713 10.2598

9 periods 6.51523 11.97799

What amount should be recorded as the cost of a machine purchased December 31, 2017, which is to be financed by making 8 annual payments of $20800 each

beginning December 31, 2018? The applicable interest rate is 7%.

$124,203

$213,405

$145,600

$135,516