The Atlas Machinery Corporation sells its equipment to contractors on either of the following arrangements: a) cash basis: payments of marked price less 10%; b) installment basis: down payment of 20% of the marked price and the balance payable in equal annual installments for the next 4 years. If you are the engineer buying a 7S Concrete Mixer which is marked at P250,000 and if money is worth 5% compounded annually, which of the following arrangements will you consider better from your standpoint? A) Pay P225,000 cash, or b) pay a down payment of P50,000 and pay the balance on equal installments of P50,000 annually for the next 4 years?

The Atlas Machinery Corporation sells its equipment to contractors on either of the following arrangements: a) cash basis: payments of marked price less 10%; b) installment basis: down payment of 20% of the marked price and the balance payable in equal annual installments for the next 4 years. If you are the engineer buying a 7S Concrete Mixer which is marked at P250,000 and if money is worth 5% compounded annually, which of the following arrangements will you consider better from your standpoint? A) Pay P225,000 cash, or b) pay a down payment of P50,000 and pay the balance on equal installments of P50,000 annually for the next 4 years?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 8MC: Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master...

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