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Compute the acquisition cost of the franchise

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Question - At the beginning of current year, Brown Company signed an agreement to operate as a franchise of Black Company for an initial franchise fee of P5,000,000. Brown Company paid P2,000,000 down and agreed to pay the balance in three equal annual payments of 1,000,000 at the end of each year. Brown Company can borrow at 5% for a loan of this type. Compute the acquisition cost of the franchise?

Reference no: EM132946926

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