Franco Purchased Heavy Machinery Costing $95,000

question 113

Multiple Choice

Franco purchased heavy machinery costing $95,000. The terms of the purchase were for monthly payments over 6 years at an interest rate of 6.5% compounded monthly. At the end of the 4^th year, Franco wanted to trade in this machinery for a newer model. Determine the balance owing on the old machinery at the end of year 4.

• A) $35,049.11
• B) $35,849.11
• C) $36,149.11
• D) $36,849.11
• E) $37,149.11

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Definitions:

Vertical Analysis

A method of financial statement analysis in which each line item is listed as a percentage of a base figure, facilitating comparisons.

Comparative Balance Sheet

A financial statement that presents the financial position of a company at different points in time, side-by-side, to facilitate comparison.

Plant Assets

Tangible resources that are used in the operations of the business and are not intended for sale to customers.

Disposal Of A Segment

The process of eliminating a division or part of a business, which may involve selling, closing, or spinning off.