Okay, here are the step-by-step calculations to solve this problem:
1) Markwell paid $175,000 in cash on July 1, 2021. This is part of the purchase amount.
2) They signed a $700,000 noninterest-bearing note due July 1, 2022. Since it is noninterest-bearing, we need to discount it to get the present value on July 1, 2021.
3) The interest rate that reflects the time value of money is given as 5%.
4) Looking at the present value of an annuity table for 1 period at 5%, the factor is 0.95238.
5) So the present value of the $700,000 note on July 1, 2021 is:
$700,000 × 0.95238 = $666,666
6) The total amount Markwell will record for the purchase of equipment is:
The $175,000 cash paid + the present value of the note of $666,666
= $175,000 + $666,666 = $841,666
Therefore, the answer is B: $841,666
Hope this explanation helps! Let me know if you have any other questions.