Rusty Corporation Purchased a Rust-Inhibiting Machine by Paying $50,000 Cash

Rusty Corporation purchased a rust-inhibiting machine by paying $50,000 cash on the purchase date and agreeing to pay $10,000 every three months during the next two years. The first payment is due three months after the purchase date. Rusty's incremental borrowing rate is 8%. The liability reported on the balance sheet as of the purchase date, after the initial $50,000 payment was made, is closest to:

A) $123,255.
B) $130,000.
C) $80,000.
D) $73,255.

Correct Answer:

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