At the beginning of $2024,$ VHF Industries acquired a machine with a fair value of $$7,779,300$ by issuing a five$-$year, noninterest$-$bearing note in the face amount of $$10$ million. The note is payable in five annual installments of $$2$ million at the end of each year.

Required:

$1.$What is the effective rate of interest implicit in the agreement?

$2.$ to $4.$ Prepare the necessary journal entries.

$5.$ Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was $9\%.$ Prepare the journal entry to record the purchase of the machine.

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)$

Complete this question by entering your answers in the tabs below.

Req $1$

Req $2$ to $4$

Req $5$

What is the effective rate of interest implicit in the agreement?

Interest rate

$10$