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A company’s management accountant wishes to calculate the present value of the cost of renting...

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A company’s management accountant wishes to calculate the present value of the cost of renting a delivery vehicle. There will be five annual rental payments of $5,000, the first of which is due immediately. The company’s discount rate is 12%.

Which TWO of the following are valid ways to calculate the present value of the rental payments? (Choose two.)

A.

$5,000 + ($5,000 x 3.605)

B.

$5,000 + $5,000/1.12 + $5,000/(1.12)2 + $5,000/(1.12)3 + $5,000/(1.12)4

C.

$5,000/1.12 + $5,000/(1.12)2 + $5,000/(1.12)3 + $5,000/(1.12)4+ $5,000/(1.12)5

D.

$5,000 x 3.605

E.

$5,000 + ($5,000 x 3.037)

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