A piece of equipment is acquired by an entity by issuing 10,000 shares of P10 par ordinary shares. The equipment has a list price of P150,000 and a trade discount of 10%. If paid in cash at the time of purchase, a 5% cash discount is allowed. The company’s ordinary shares are actively traded in a capital market with an average market price of P13 at the date of the exchange. What is the cost of the equipment?

A piece of equipment is acquired by an entity by issuing 10,000 shares of P10 par ordinary shares. The equipment has a list price of P150,000 and a trade discount of 10%. If paid in cash at the time of purchase, a 5% cash discount is allowed. The company’s ordinary shares are actively traded in a capital market with an average market price of P13 at the date of the exchange. What is the cost of the equipment?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 7P

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A piece of equipment is acquired by an entity by issuing 10,000 shares of P10 par ordinary shares. The equipment has a list price of P150,000 and a trade discount of 10%. If paid in cash at the time of purchase, a 5% cash discount is allowed. The company’s ordinary shares are actively traded in a capital market with an average market price of P13 at the date of the exchange. What is the cost of the equipment? A. 135,000 B. 128,250 C. 150,000 D. 130,000
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