Libby Company purchased equipment by paying $5,000 cash on the purchase date and agreeing to pay $5,000 every six months during the next four years. The first payment is due six months after the purchase date. Libby's incremental borrowing rate is 8%. The equipment reported on the balance sheet as of the purchase date is closest to:

a. $45,000

b. $38,664.

C. $33,664.

d. $40,000

a. $45,000

Explanation:

The balance records the purchase value of any asset or the value which is known as the historical cost of the asset.

Hence,

$5000 at every 6 months, in four years it will be = 4*2*5000 = $40,000.

And currently the company is paying $5000 cash upfront.

Therefore, the total cost of the equipment to be reported in the balance sheet will be = 40000+5000 = $45,000.

Thanks buddy.

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.