Lucky company borrowed an amount of money from ZER Finance Co. In return, ZER Finance Co received a $ 200,000, 4 year, 6% note from Lucky. On the date of the transaction, the market rate on interest was 8% for a similar note.

Instructions:

Calculate the net carrying value of the notes receivable on the books of ZER Finance, at the end of year one assuming that Zer is using effective interest method to amortize discount or premium on note receivable

The following information might help you:

Present value of a future sum factor, 6%, 4 years= 0.7921

Present value of a future sum factor, 8%, 4 years= 0.7350

Present value of an ordinary annuity factor, 6%, 4 years= 3.5

Present value of an ordinary annuity factor, 8%, 4 years= 3.3