Computation of cash received by Nash Company on December 2020 | ||||
Present Value of principle ($1,284,300 * PVF , .12 , 5years) | ||||
= | ($1,284,300*0.56743) | = | $728,750 | |
Present value of interest ($128,430* PVAF,0.12,5years) | ||||
= | ($128,430 * 3.60478) | = | $462,962 | |
Cash received | $1,191,712 | |||
* Interest = 10% of $1,284,300 = $128,430 |
On December 31, 2020, Nash Company signed a $1,284,300 note to Crane Bank. The market interest...
On December 31, 2020, Nash Company signed a $1,284,300 note to Crane Bank. The market interest rate at that time was 12%. The stated interest rate on the note was 10%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Nash's financial situation worsened on December 31, 2022, Crane Bank determined that it was probable that the company would pay back only $770,580 of the principal at maturity. However, it was considered likely that interest would...
On December 31, 2020Nash Company signed a $1.284,300 note to Crane Bank. The market interest rate at that time was 12%. The stated interest rate on the note was 10%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Nash's financial situation worsened. On December 31, 2022, Crane Bank determined that it was probable that the company would pay back only $770,580 of the principal at maturity. However, it was considered likely that interest would continue...
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On December 31, 2020, Headland Company signed a $1,132,500 note to Sage Bank. The market interest rate at that time was 10%. The stated interest rate on the note was 8%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Headland's financial situation worsened. On December 31, 2022, Sage Bank determined that it was probable that the company would pay back only $679,500 of the principal at maturity. However, it was considered likely that interest would...
On December 31, 2020, Sheffield Company signed a $1,186,300 note to Tamarisk Bank. The market interest rate at that time was 12%. The stated interest rate on the note was 10%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Sheffield’s financial situation worsened. On December 31, 2022, Tamarisk Bank determined that it was probable that the company would pay back only $711,780 of the principal at maturity. However, it was considered likely that interest would...
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Exercise 7-27 On December 31, 2017, Cullumber Company signed a $1,054,800 note to Riverbed Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Cullumber’s financial situation worsened. On December 31, 2019, Riverbed Bank determined that it was probable that the company would pay back only $632,880 of the principal at maturity. However, it was considered likely that...