Question

On December 30 of the current year, Azrael, Inc., purchased a machine from Abiss Corp. in exchange for a noninterest-bearing note requiring 8 payments of $20,000. The first payment was made on December 30, and the others are due annually on December 30. At date of issuance, the prevailing rate of interest for this type of note was 11%. Present value factors are as follows:

Answer 1

Answer:

$94,244

Explanation:

Data provided as per the question below:-

Note payable amount = $20,000

rate of interest = 11%

The computation of the present value of factors are shown below:-

Here we are using the annuity table of present value at 11% for 7 years

Present value of factors = Note payable amount × present value annuity factor

= $20,000 × 4.7122

= $94,244