Question
Alora Enterprises creates and manufactures unique toys. However, it has exhausted its financing options with banks and stockholders. It approaches one of its vendors (Wood,
Alora Enterprises creates and manufactures unique toys. However, it has exhausted its financing options with banks and stockholders. It approaches one of its vendors (Wood, Inc.) to accept a note payable from them in exchange for past due invoices payable to Wood. Wood understands that Alora is unable to pay for its wood now. However, Wood believes that Alora's new products will be a success in the future. In order for Wood to accept Alora's note, it requires a 12% rate of return with interest payable at the end of two years. Further, new purchases from Wood, must be paid in cash. The past due balance is $50,000, as of the signing of the note payable. After two years, how much interest will Alora pay to Wood? Your Answer:
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