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Lerok [7]
3 years ago
7

On October 1, 20X1, a company purchased a piece of land by agreeing to pay the seller $450,000 in two years. If the company had

borrowed the money from a bank to pay the seller immediately, management estimates the bank would have required interest of 9%. For what amount should the company record the land on the date of purchase (rounded to the nearest dollar)?
a. $450,000.
b. $412,844.
c. $378,756.
d. $369,000
Business
1 answer:
erma4kov [3.2K]3 years ago
4 0

Answer:

$378,756

Explanation;

The net present value of land will be =$450,000/1.09^2=$378,756

The land will be recorded in net present value of land by discounting the cost of land with interest rate of buying from the bank.

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I used an excel spreadsheet since there is not enough room here. I ordered the given data:

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Answer:

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