While reading an issue of Power Equipment Trade journal, Justin Perry noticed an ad for equipment he wanted to purchase for use in his commerce. The ad offered the equipment under the subsequent terms:
Model XR 55684
Quarterly payments of $22,000 for only 4 years
$352,000 zero interest loan
The ad captured Perry's attention partly because he was concerned that interest charges incurred by his business were getting out of line. Thus, the price was higher than prices for this model he had seen elsewhere.
Required:
Advise Mr. Perry on purchase he is considering. How should note payable and the equipment be valued?