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Pv of 1 at 12 for 10 periods 0322 pv of an ordinary

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PV of 1 at 12% for 10 periods0.322PV of an ordinary annuity of 1 at 12% for 10 periods5.650QUESTIONS:1.On December 31, 2020, what is the carrying amount of notes receivable?A.P 5,000,000B.P 2,175,000C.P 1,610,000D.P 2,825,000SOLUTION:Annual payment for 10 years500,000Multiply by PVF of an ordinary annuity of 1 at 12% for 10 periods5.650Carrying amount of notes receivable at 12/31/20202,825,000Letter D
2.What is the gain on sale of equipment to be recognized in 2020?0
3.What amount of interest income should be recognized for 2021?
SOLUTION:
4.What is the carrying amount of the notes receivable on December 31, 2021?PV0
MCQ 1
Moderate Bank granted a loan to a borrower on January 1, 2020. The interest on the loan is 10% payable annually starting December 31,2020. The loan matures in three years on December 31, 2022.Principal amount5,000,000Direct origination costs incurred100,000Indirect origination costs incurred50,000Origination fees charged against the borrower340,000After considering the origination fee received from the borrower and the direct origination cost incurred, the effective rate on the loan is12%.

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