Question

Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2021. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $5,000 on each September 30, beginning on September 30, 2024. (Use appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount.)
 
Required:
Calculate the amount at which Lincoln should record the note payable and corresponding purchases on September 30, 2021, assuming that an interest rate of 10% properly reflects the time value of money in this situation.
  

Answer 1

Answers.

1. Amount of loan=$17997

2. Monthly installment=$670

11 D Amount of Loon - Present Value of all six hoyments S 5000x az XV glas - Sooox P. v Af $1 at n=6, i=10% x P. V of $1 at n=2 (= lot Sooo X 4.35526X0.82645 Amount of Loon $ 17997

i = 24 12 24 = 2% per month n = 30 Let the monthly payments be iP. Puchare Price = Doon payment & Present Value of monthly instellen 20OOD = 5000 + Pazoto27 Pazt 15000 Px P. VA of $1 at n=30, i=2% = 15000 P = 15000 22-39646 P= $670