TZ Acquired a Machine and Gave 10 Instalment Notes of $2,000

question 60

Multiple Choice

TZ acquired a machine and gave 10 instalment notes of $2,000 each. One note matures on the last day of each of the next 10 semi-annual periods. No interest was specified on the notes or the purchase contract. The going rate of interest for such transactions was 20 percent per annum. The cost of the new machine should be recorded by TZ as (rounded to the nearest dollar) :

• A) $7,710.
• B) $12,290.
• C) $18,000.
• D) $20,000.

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Definitions:

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