What is the cost of the franchise acquired on july

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Reference no: EM132700759

Problem 1: On July 1, 2020, Oftenback Company signed an agreement to operate as franchisee of Jollimac, Inc. for an initial franchise fee of P600,000. Of this amount, P200,000 was paid when the agreement was signed and the balance is payable in four equal annual payments starting July 1, 2021. The payment is not refundable and no future services are required for the franchise. The franchisee's credit rating indicates that it can borrow money at `4% for a loan of this type. What is the cost of the franchise acquired on July 1, 2020?

Reference no: EM132700759

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