Answer:
Amortize loan woul´d be the best loan
Explanation:
Even though there are no options in the question, the amortize loan coul´d be the best loan, with equal principal payments.
This one is a scheduled periodic payments that are applied to both principal and interests. This one first pays off the relevant interests expense for the period, and then the payment reduces the principal
Answer:
The cost of the truck that should be recorded at the time of purchase is $46,639
Paying installment is the best option
Explanation:
In order to Calculate the cost of the truck that should be recorded at the time of purchase we need find out present value of future amount of 60,400 with the following formula:
PV=FV/(1+i)^n
FV = Future value
i = interest rate
n = No of years
By applying the formula = 60,400/(1+.09)^3
PV= $46,639
Therefore, $46,639 should be recorded as a cost of truck.
Paying installment is better option than paying lump sum amount of $28,400 as present value of installment method ($26,322 as per below table) is less than immediate payment amount.
PV of installment method
Year installment method PV Factor PV
1 10,400 0.917 9,537
2 10,400 0.842 8,757
3 10,400 0.772 8,029
Total 26,322