Dubois Inc. loans money to John Kruk Corporation in the amount of $800,000. Dubois accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Dubois needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Dubois will receive on the sale of the note?

PVOA = R (PVFOA n, i )

PVOA = $32,000 (PVFOA 10, 5% )

PVOA = $32,000 (7.72173) = $247,095.36

In the solution above, where does the $32,000 come from?