Question

On January 1, 2024, Maricopa Company purchased land costing 677,000. Instead of paying cash at the time of purchase, Maricopa plans to make four installment payments of182,131.31 on June 30 and December 31 in 2024 and 2025. The payments include interest at a rate of 6

1) $677,000
2) $182,131.31
3) $182,131.31 x 4
4) Cannot be determined

Answer 1

The total payment amount that Maricopa Company will make for the land is calculated by multiplying the installment payment amount by the number of payments, resulting in a total of $728,525.24.

Step-by-step explanation:

The student is asking about the calculation of the total payment amount for land that was purchased with installment payments inclusive of interest.

To determine the correct amount that Maricopa Company will pay for the land, we can multiply the single installment payment by the number of payments. Since they plan to make four installment payments of $182,131.31, we multiply this figure by four to get the total amount that will be paid over two years, which includes the principal and interest.

So, the total amount paid is $182,131.31 × 4 = $728,525.24. This figure is higher than the initial cost of the land due to the interest included in the installment payments.

Therefore, the correct option among the given choices would be 3) $182,131.31 x 4.