Johnson corporation bought a new machine and agreed to pay for it in equal annua

Question

Johnson corporation bought a new machine and agreed to pay for it in equal annual installments of $6,000 at the end of each of the next 5 years. Assume the prevailing interest rate for this type of transaction is 12%, Assume the present value of an ordinary annuity of $1 at 12% for five periods is 3.60. The future amount of an ordinary annuity of $1 at 12% is 6.35. The present value of $1 at 12% is 0.567. How much should Johnson record as the note payable on the balance sheet if the financial statements were prepared today? A. $17,010 B. $21,600 C. $30,000 D. $38,100

Explanation / Answer

B. $21,600

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