Question
25. Lando Calrissian just won the lottery and is trying to decide between the options of receiving the annual cash flow payment option of $360,000
25. Lando Calrissian just won the lottery and is trying to decide between the options of receiving the annual cash flow payment option of $360,000 per year for 25 years beginning today, or receiving one lump-sum amount today. Lando can earn 5% investing this money. At what lump-sum payment amount would he be indifferent between the two alternatives? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
26. BB-8 accepted a three-year, noninterest-bearing note in exchange for merchandise sold. Which of the following is true?
BB-8 would debit interest revenue over the life of the note.
BB-8 would multiply sales revenue by the effective interest rate to determine interest revenue each period.
BB-8 would debit notes receivable when the note is collected.
BB-8 would credit a discount on notes receivable when recording the sale.
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