Prob 14-3

# 40183 071178 57644 427068 pres ent value pric

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Unformatted text preview: he notes \$ 484,712 ¥ 4% × \$600,000 * pres ent value of an ordinary annuity of \$1: n = 3, i = 12% (PVA of \$1) ** pres ent value of \$1: n = 3, i = 12% (PV of \$1) Mac hinery (pric e determined above) = 484,712 Dis c ount on notes pay able (differenc e) = 115,288 Notes pay able (fac e amount) = 600,000 2. Cas h Pay ment 4% × Fac e Amount 1 2 3 24,000 24,000 24,000 Effec tive Interes t 12% × Outs tanding Balanc e .12 (484,712) .12 (518,877) .12 (557,142) 72,000 Inc reas e in Balanc e Dis c ount Reduc tion = 58,165 = 62,265 = 66,858* 34,165 38,265 42,858 187,288 Outs tanding Balanc e 484,712 518,877 557,142 600,000 115,288 * rounded. 3. (a) Interes t ex pens e (mark et rate x outs tanding balanc e) = 58,165 Dis c ount on notes pay able (differenc e) = 34,165 Cas h (s tated rate x fac e amount) = 24,000 Interes t ex pens e (mark et rate x outs tanding balanc e) = 62,265 Dis c ount on notes pay able (differenc e) = 38,265 Cas h (s tated rate x fac e amount) = 24,000 Interes t ex pens e (mark et rate x outs tanding balanc e) = 66,858 Dis c ount on notes pay able (differenc e) = 42,858 Cas h (s tated rate x fac e amount) = 24,000 (b) Cas h (s tated rate x fac e amount) = 600,000 ezto.mhecloud.mcg r aw- hill.com/hm_accounting .tpx?todo= pr intviewSing le 4/4...
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