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Cora’s company sold equipment to a competitor on June 1, 2020, where they both agreed to an installment sales contract with a rate of 8%. If this contract requires 8 equal payments due annually starting June 1, 2020, then a:_______.

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jepessoa

Answer:

in order for Cora's company to properly record this sale it must use the present value of the future payments.

First it must calculate the 8 equal payments (we could do it using a loan calculator or excel spreadsheet), and then it must calculate the present value of the payments either individually using PV = FV(n) / 1.08ⁿ or by using a table with the future value of the annuity.

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