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Materials Ltd. purchases inventory on 1 April 20X7 and agrees to pay the vendor $210,000 on 31 March 20X9, plus annual interest at 2%
Materials Ltd. purchases inventory on 1 April 20X7 and agrees to pay the vendor $210,000 on 31 March 20X9, plus annual interest at 2% each 31 March. The market interest rate for similar term and security is 7%. Assume also that the inventory does not have a readily determinable market value. (PV of $1. PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the present value of the note payable. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.) Present value $ 19,101,581 2. Prepare a table that shows the balance of the note payable and interest expense over the life of the note. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.) Opening Net Interest Expense Liability Market Rate Interest Paid Discount Amortization Closing Net Liability Year 1 Year 2
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