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yaroslaw [1]
2 years ago
6

A company purchases a building by signing a $200,000 10% interest bearing note due at the end of five years. at what amount shou

ld the building be recorded?
Business
1 answer:
Damm [24]2 years ago
5 0

The amount the building should be recorded is the present value of the amount payable in 5 years which is $124,184.26

What is the present value of future payment?

The present value of the payment expected in 5 years is determined as using the present value formula of a single cash flow in respect of the building:

PV=FV/(1+r)^N

FV=year 5 payment=$200,000

r=interest rate=discount rate=10%

N=number of years before payment is due=5

PV=$200,000/(1+10%)^5

PV=$124,184.26

Find out more about present value on:brainly.com/question/28125944

#SPJ1

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