On July 7, 2014, Lawrence Company Sold Some Machinery to Johnson

Multiple Choice

On July 7, 2014, Lawrence Company sold some machinery to Johnson Construction Company. The sales contract requires Johnson to pay five equal annual payments of $75,000 each, beginning on July 7, 2014. What present value concept is appropriate for this situation?

A) present value of an annuity due of $1 for five periods
B) present value of an ordinary annuity of $1 for five periods
C) future value of an annuity of $1 for five periods
D) future value of $1 for five periods