Crane Company receives a $64,000, 7-year note bearing interest of 12% (paid annually) from a customer...

Crane Company receives a $64,000, 7-year note bearing interest of 12% (paid annually) from a customer at a time when the discount rate is 8%.

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Expert Solution

	$		PVF
Present Value of note after 7 year	37,343		n	@ 8%	Cumulative
(64000 x .5835)			1	0.9259
			2	0.8573
Present value of Interest over 7 year	39,985		3	0.7938
(64000 x 12% x 5.2064)			4	0.7350
			5	0.6806
Total Present Value	77,329		6	0.6302
			7	0.5835	5.2064
So, if company receives $ 64,000 note having present value of $ 77,329


Journal entry at accepting note	$	$
12% Note Receivable	77,329
Accounts Receivable		64,000
Interest Income		13,329


Let me know if any query

ekkarill92 answered 11 months ago

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