I was going to ask this yesterday when my username wasn't working but forgot until now! I think it will normally tell you, but I think 360 is the typical number to use…maybe? I hope it just tells us
On September 1, Year 1, an entity purchased a new machine that it does not have to pay for until September 1, Year 3. The total payment on September 1, Year 3, will include both principal and interest. Assuming interest at a 10% rate, the cost of the machine will be the total payment multiplied by what time value of money factor?
The cost of the machine on 9/1/Year 1 is the present value of the payment to be made on 9/1/Year 3. To obtain the present value, i.e., todayβs price, the future payment is multiplied by the present value of $1 for two periods at 10%.
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