Which model should you buy assuming 12 rate Year Payment Model 2 1 10000 2 9000

# Which model should you buy assuming 12 rate year

• 4
• 91% (33) 30 out of 33 people found this document helpful

This preview shows page 1 - 4 out of 4 pages.

Model B requires the following payment schedule. Which model should you buy assuming 12% rate?YearPayment (Model 2)1\$10,00029,00038,00045,00053,000 Model 2
Model B year paymen t present value 1 \$10,000 8928.57 1 2 9,000 8035.71 4 3 8,000 7142.85 7 4 5,000 4464.28 6 5 3,000 2678.57 1 total 31250 Model A model A year payment present value 1 8,000 7142.857143 2 8000 7142.857143 3 8000 7142.857143 4 8000 7142.857143 5 8000 7142.857143 total 35714.28571 since model A has present value of 35714 and model B has total of 31250 we have to choose model b as appropriate choice Question 3Prepare the journal entries for the following transactions for Dundar Mifflin:1.Dundar Mifflin purchased 1,200 shares of the total of 100,000 outstanding shares of Steve & Company stock for \$20.75 per share plus a \$70 commission.2.Steve & Company total earnings for the period are \$84,000.3.Steve & Company paid a total of \$40,000 in cash dividends to shareholders of record.