Sunland company financed the purchase of a machine by making payments of $3000 a

Question

Sunland company financed the purchase of a machine by making payments of $3000 at the end of each of five years. The appropriate rate of interest was 12%. The future value of one for five periods at 12% is 1.76234. The future value of an ordinary annuity for five periods at 12% is 6.35285. The present value of an ordinary annuity for five periods 12% is 3.60478. What was the cost of the machine to Sunland? Sunland company financed the purchase of a machine by making payments of $3000 at the end of each of five years. The appropriate rate of interest was 12%. The future value of one for five periods at 12% is 1.76234. The future value of an ordinary annuity for five periods at 12% is 6.35285. The present value of an ordinary annuity for five periods 12% is 3.60478. What was the cost of the machine to Sunland?

Explanation / Answer

cost of the machine to Sunland=$3000*Present value of annuity factor(12%,5)

=$3000*3.60478

which is equal to

=$10814.34

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