Question

Cullumber Company receives a $87,000, 4-year note bearing interest of 6% (paid annually) from a customer...



Cullumber Company receives a $87,000, 4-year note bearing interest of 6% (paid annually) from a customer at a time when the discount rate is 8%.

Click here to view the factor table.

(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

What is the present value of the note received by Cullumber? (Round answer to 2 decimal places, e.g. 25.25.)

Present value of note received

$enter the present value of the note received in dollars rounded to 2 decimal places
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Homework Answers

Answer #1

Solution:

Present value of the note received by Cullumber = $ 81,236.90

Calculation:

Present value of interest $           17,289.30
[87000*6/100*3.31212 PV annuity factor (8%, 4 years, annually interst)]
Present value of the notes $           63,947.60
[87000*0.73503 PV ordinary factor (8%, 4 years)]
Present Value of Note Received $           81,236.90
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