Question
On December 31, 2020, Teal Company signed a $1,022,000 note to Flint Bank. The market interest rate at that time was 11%. The stated interest
On December 31, 2020, Teal Company signed a $1,022,000 note to Flint Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Teals financial situation worsened. On December 31, 2022, Flint Bank determined that it was probable that the company would pay back only $613,200 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,022,000 loan.
(a)
Determine the amount of cash Teal received from the loan on December 31, 2020. (Round present value factors to 5 decimal places, e.g. 0.52513 and final answer to 0 decimal places, e.g. 5,275.)
Amount of cash Teal received from the loan | $enter a dollar amount of cash Teal received from the loan |
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