On October 1, 2009, Justine Company Purchased Equipment from Napa

Multiple Choice

On October 1, 2009, Justine Company purchased equipment from Napa Inc. in exchange for a noninterest-bearing note payable in five equal annual payments of $500,000, beginning Oct 1, 2010. Similar borrowings have carried an 11% interest rate. The equipment would be recorded at:

A) $2,500,000.
B) $2,225,000.
C) $1,847,950.
D) $2,115,270.PVA = $500,000 x 3.69590* = $1,847,950 *PVA of $1: n=5; i=11%