A Machine Is Purchased by Making Payments of $5,000 at the Beginning

question 58

Multiple Choice

A machine is purchased by making payments of $5,000 at the beginning of each of the next five years.The interest rate was 10%.The future value of an ordinary annuity of 1 for five periods is 6.10510.The present value of an ordinary annuity of 1 for five periods is 3.79079.What was the cost of the machine?

• A)$33,578
• B)$30,526
• C)$20,849
• D)$18,954

---

Definitions:

Financial Assets

Assets that derive value because of a contractual claim, such as stocks, bonds, bank deposits, and notes receivable.

Local Governments

Entities responsible for governing areas smaller than a state or province, often focusing on municipal or regional issues.

Federal Government

The national government of a federal country, which shares sovereignty with the subnational governments (states, provinces, etc.).

Government Purchases

Expenditures by government bodies on goods and services that directly contribute to a nation's aggregate demand.