Question
On July 1, 20X1, Company A performed services in exchange for a 5-year non-interest-bearing note with a face value of $25,000. The notes face value
On July 1, 20X1, Company A performed services in exchange for a 5-year non-interest-bearing note with a face value of $25,000. The notes face value is due to be paid back five (5) years from the notes issuance date.
Company A uses a discount rate of 12% compounded annually on non-interest-bearing notes of this nature.
- Using your financial calculator, what is the present value of this note on the issuance date? Round the answer to the nearest whole dollar.
Answer: $_________
- How much total interest will Company A earn over the life of this note?
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Financial Accounting
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
IFRS 3rd edition
978-1118978085
