E7-15 solution

# E7-15 solution - EXERCISE 7-15 1 Notes Receivable Discount...

This preview shows pages 1–3. Sign up to view the full content.

EXERCISE 7-15 1. Notes Receivable. ................................ 1,101,460 Discount on Notes Receivable. . 401,460 Land. ............................................ 590,000 Gain on Sale of Land . ................ 110,000 (\$700,000 – \$590,000) \$1,101,460 Face value of note .63552 Present value of 1 for 4 periods at 12% 700,000 Present value of note 1,101,460 Face value of note \$ 401,460 Discount on note receivable Using a financial calculator: PV ? yields \$(699,998) I 12% N 4 PMT - FV \$ 1,101,460 Type 0 Excel formula: =PV(rate,nper,pmt,fv,type)

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
EXERCISE 7-15 (Continued) 2. Notes Receivable. ................................ 400,000 Discount on Notes Receivable. . 178,836 Service Revenue . ....................... 221,164 Calculation of the present value of the note: Maturity value 400,000 Present value of \$400,000 due in 8 years at 12%—\$400,000 X .40388 \$161,552 Present value of \$12,000 payable annually for 8 years at 12% annually—\$12,000 X 4.96764 59,612 Present value of the note and
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 12/02/2011 for the course ECON eco200 taught by Professor Wolfson during the Spring '11 term at University of Toronto.

### Page1 / 3

E7-15 solution - EXERCISE 7-15 1 Notes Receivable Discount...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online