Homework Answers
Answer is option A
a. $87,344, $0, $12656
Payment is received two years after delivering the merchandise and the amount received is equal to contract price. Thus, this contract price will be discounted for two years at given interest rate and it ill be considered interest expense
Contract value after to years = 100000/(1.07^2) = 87344
Interest expense = 100000-87344 = 12656
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