Russell Company has acquired a building with a loan that requires payments of $20,000 every six months for 5 years. The annual interest rate on the loan is 12%. What is the present value of the building? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
A) $72,096
B) $113,004
C) $147,202
D) $86,590
E) $200,000
C) $147,202
Explanation: The PV factor on the Present Value of an Annuity table when n = 10 and i = 6% is
7.3601.
Present Value of an Annuity = Annuity * PV Factor
Present Value of an Annuity = $20,000 * 7.3601 = $147,202
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