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What present value concept is appropriate for situation

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Problem 1: On July 1, Goblette Company sold some machinery to another company. The two companies entered into an installment sales contract at a predetermined interest rate. The contract required 5 equal annual payments with the first payment due on July 1, the date of sale. What present value concept is appropriate for this situation?

A. Present value of an annuity due of $1 for 5 periods.

B. Present value of an ordinary annuity of $1 for 5 periods.

C. Future amount of an annuity due of $1 for 5 periods.

D. Future amount of $1 for 5 periods.

 

Reference no: EM132794605

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