On January 1, 20X1, a company financed the sale of equipment and recorded a note receivable for the sale. The accountant inappropriately recorded the sale at the face value and coupon rate in the below income statement.

Notes receivable (Face value)	650,000
Tax rate	30%

Note receivable information:

Term of the note	8 years
Coupon rate	1.2%
Market rate	5.6%

The note is due in equal annual payments of principle and interest.

Incorrect income statement, for the year ended December 31, 20X1

Sales	$2,769,700
Interest revenue	7,800
Cost of goods sold	1,249,100
Expenses	994,300
Pretax income	534,100
Tax expense	160,230
Net income	373,870

What is the fair value of the notes receivable (and therefore fair value of the sale) at the time of the transaction?

Multiple Choice

432,559

650,000

371,129

540,698

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