Present Value

On January 1, 2016, Ken Company sold a machine to Burns Company. Burns signed a non-interest bearing note requiring payment of $30,000 annually for 7 years. The first payment was made on January 1, 2016. The prevailing rate of interest for this type of note at the date of issuance was 10%. Information on present value factors is as follows:

Periods	Present Value of $1 at 10%	Present Value of an Ordinary Annuity of $1 at 10%
6	0.56	4.36
7	0.51	4.87

Ken should record the sale at:

a.$160,800

b.$146,100

c.$130,800

d.$107,100