Cost of the equipment = 4,000 + PV of 6,000 ( annuity ) + 2,000 + 3,500

= 4,000 +  15,480 + 2,000 + 3,500

=  24,980

Hope it helps.

Persist..

Good Point. This is what Becker says in Page F4-33 for Valuation of Fixed Assets when purchased which is consistent with above answer.

"Historical cost is the basis for valuation, which is measured by the cash of cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use"

My understanding is Costs of downpayment $ 4000 and remainigng costs (15,480 ) are cash or cash equivalent value ( present value) and the costs for shipping and installation are incurred so that machine can be in use. All the costs, therefore, are Historical cost.

Anyone have any other explaination ?

Thanks