For which of the following transactions would the use of the present value of an annuity due concept be appropriate in calculating the present value of the asset obtained or liability owed at the date of incurrence? A. A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement.

B. A capital lease is entered into with the initial lease payment due one month subse-quent to the signing of the lease agreement.

C. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 7%.

D. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 9%.

Question

Business

David Vincent

23 June, 17:25

For which of the following transactions would the use of the present value of an annuity due concept be appropriate in calculating the present value of the asset obtained or liability owed at the date of incurrence? A. A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement.

B. A capital lease is entered into with the initial lease payment due one month subse-quent to the signing of the lease agreement.

C. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 7%.

D. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 9%.

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Answers (1)

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Alessandra Glass · Answer 1

A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement. The annuity begins with a payment

Explanation:

An annuity-due represnet an annuity were payment or deposits are perform at the beginning of the period.

B no. It doesn't start with a payment.

C no, there is no payment at issuance.

D same as C only the rates changes but this, do not change the essence of the annuity it is still a common annuity not annuity-due