How much is the initial cost of the fixtures

Reference no: EM132817595

Deferred settlement - no cash price equivalent

Problem 1: On January 1, 20x1, REEDY SLENDER Co. purchased fixtures with an installment price of ?520,000 by paying ?40,000 down payment and issuing a three-year noninterest bearing note of ?480,000 payable in three equal annual installments starting December 31, 20x1. The prevailing rate for the note as of January 1, 20x1 is 12%. How much is the initial cost of the fixtures?

a. 520,000 b. 480,000 c. 424,293 d. 360,000

Reference no: EM132817595

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