Acme Company made a short term loan of $5,000 to one of its suppliers that was having cash flow problems.This supplier is continuing to have problems, and Acme considers it likely that they will not be able to collect the full amount when the principal is due in 1 year.The company's credit department has developed the following probability table for the amounts it expects to collect in 1 year.Use these amounts, and a discount rate of 7% in order to determine the fair market value to be used for reporting this note on Acme's balance sheet.

Possible Cash Flows Probability

$0 5.00%

$2,500 25.00%

$4,000 55.00%

$5,000 15.00%