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horrorfan [7]
3 years ago
7

On January 1, Year 1, Barrett, Inc., purchased equipment and signed a note agreeing to pay $100,000 on December 31, Year 3. The

market interest rate applicable to the note was determined to be 10%. What is the amount that will be credited to Note Payable in the journal entry dated January 1, Year 1?
Business
1 answer:
Afina-wow [57]3 years ago
3 0

Answer:

$75,131

Explanation:

The computation of the amount of note payable credited is shown below:

Notes payable is

= Agreed amount to pay × present value factor at 10% for 3 years

= $100,000 ×  0.75131

= $75,131

By multiplying the agreed amount to pay with the present value factor at 10% for 3 years we can get the amount credited to the note payable

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Carl's monthly take-home pay is $2000, and his monthly rent is $500. if both his monthly take-home pay and his rent increase by
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Read 2 more answers
Your great aunt left you an inheritance in the form of a trust. The trust agreement states that you are to receive $2,400 on the
bearhunter [10]

Answer:

The value of this inheritance today is <u>$30,541.12</u>.

Explanation:

Since the $2,400 is to be received the first day of each year, this is shows that this an annuity due and the relevant formula to use is the formula for calculating the present value (PV) of an annuity due given as follows:

PV = P * [{1 - [1 / (1 + r)]^n} / r] * (1 + r) .................................. (1)

Where ;

PV = Present value or the value of this inheritance today =?

P = Annual receipt = $2,400

r = discount rate = 6.75%, or 0.0675

n = number of years = 20

Substituting the values into equation (1) above, we have:

PV = $2,400 * [{1 - [1 / (1 + 0.0675)]^25} / 0.0675] * (1 + 0.0675)

PV = $2,400 * 11.9208107635642 * 1.0675

PV = $30,541.12

Therefore, the value of this inheritance today is <u>$30,541.12</u>.

3 0
3 years ago
Aaron is considering an investment that will pay $7,500 a year for five years, starting one year from today. This is an example
Olegator [25]

Answer:

This is an example of a

b. an ordinary annuity.

Explanation:

Aaron's cash inflows of $7,500, which he receives at the end of the year, is an ordinary annuity because it comprises a series of equal payments receipts received over a fixed length of time, and it occurs at the end of the year.  If Aaron receives the series of payments at the beginning of each period and not at the end, it will be described as an annuity due.  If Aaron receives the series of payment indefinitely, it is called a perpetuity.

7 0
3 years ago
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