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eX 10+ Audit' |::Cengage It Book Corngl: Digital Learl+ of-1Jpg raw-Hi840-30-35 httpsy mbe & Fitch Helter Co. CarpeN !alt me 1 Restaurants RestaurantsBanks ,ternal Revenue Sen Olternal Revenue Sen Employment United Intranet logi adresearchsetnet Home . Adne Indep Barks Yahoo Help Save & Exit resent and future value tables of $1 am% are presented below PV of $1 FV of $1 PVA of $1 FVA of $1 0.9e89 1.118000.90090 1.8000 2 0.811621.2321 1.712522.1180 30.73119 1.367632.443713.3421 3.18245 4. 7097 5 8.59345 1.68586 3.695986.2278 4 0.65873 1.51897 6 0.53464 1.87041 4.23854 7.91 Spielberg Inc signed a $150,000 noninterest-bearing note due in two years from a production company eager to do business. Comparable borrowings have carried an 11% interest rate What is the value of this debt at its inception? Mutiple Choice $166,500 $121743 $133.500 C Prev 8 of 20B Next >Explanation / Answer
Result : $121,743 Value of the debt at its inception.
Explaination and Calculation :
Rate of Interest on comparable borrowings is 11%
Value of Note due in two years $ 150,000
For calculation of today's value of the Note Payable. We have to calculate the present value of the Note ,
Present value of note payable =( Future value x Present value factor @11% for 2nd year)
= (150,000 x 0.81162) = $121,743
So present value of the note will be $121,743.
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