On January 1, 2017, Jefferson Company completed arrangements to purchase a new piece of equipment. The agreement calls for equal annual payments on January 1 of each year for six years. The first payment of $7,500 is to be made on January 1, 2017. The interest rate is 12%.
?
Required:
?
Calculate the cost of the equipment to Jefferson Company.
What will be an ideal response?
Present value of an annuity due, table approach:?
| PVd= C´Factor for Pdn= 6-1, i = 12% | ||
| ? | ? | |
| Table factor of n-1: | ? | |
| Table factor for 5 | 3.604776 | |
| ? | +1.000000 | |
| Converted table factor | 4.604776 | |
| ? | ? | |
| PVd | = $ 7,500´4.604776 | |
| ? | = $34,535.82 | |
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