Asked by
Darrence Pelicano
on Oct 28, 2024
Verified
On July 7, 2010, Luke Company sold some machinery to Jones Construction Company.The sales contract requires Jones to pay five equal annual payments of $70, 000 each, beginning on July 7, 2010.What present value concept is appropriate for this situation?
A) present value of an annuity due of $1 for five periods
B) present value of an ordinary annuity of $1 for five periods
C) future amount of an annuity of $1 for five periods
D) future amount of $1 for five periods
Present Value Concept
A financial calculation that determines the value of a payment or series of payments in the present, by discounting future cash flows.
Equal Annual Payments
A financing repayment method where the borrower makes consistent yearly payments over the term of the loan, covering both principal and interest.
- Illuminate the distinctions between ordinary annuities and annuities due.
Verified Answer
MI
Learning Objectives
- Illuminate the distinctions between ordinary annuities and annuities due.