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Allison Freight Services is replacing part of its fleet of trucks by purchasing them under a note agreement with Keystone Finance on January 1, 2022. Allison financed $45,800,000, and the note agreement will require $11.80 million in annual payments starting on December 31, 2022, and continuing for a total of four more years (final payment on December 31, 2026). Keystone Finance will charge Allison Freight Services the market interest rate of 8.5% compounded annually. After the first payment was made, the note payable liability on December 31, 2022, is closest to: a) $39,652,500 b) $46,920,000 c) $34,825,000 d) $37,893,000

Allison Freight Services is replacing part of its fleet of trucks by purchasing them under a note agreement with Keystone Finance on January 1, 2022. Allison financed $45,800,000, and the note agreement will require $11.80 million in annual payments starting on December 31, 2022, and continuing for a total of four more years (final payment on December 31, 2026). Keystone Finance will charge Allison Freight Services the market interest rate of 8.5% compounded annually. After the first payment was made, the note payable liability on December 31, 2022, is closest to: a) $39,652,500 b) $46,920,000 c) $34,825,000 d) $37,893,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 17P
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Allison Freight Services is replacing part of its fleet of trucks by purchasing them under a note agreement with Keystone Finance on January 1, 2022. Allison financed $45,800,000, and the note agreement will require $11.80 million in annual payments starting on December 31, 2022, and continuing for a total of four more years (final payment on December 31, 2026). Keystone Finance will charge Allison Freight Services the market interest rate of 8.5% compounded annually. After the first payment was made, the note payable liability on December 31, 2022, is closest to: a) $39,652,500 b) $46,920,000 c) $34,825,000 d) $37,893,000
Transcribed Image Text:Allison Freight Services is replacing part of its fleet of trucks by purchasing them under a note agreement with Keystone Finance on January 1, 2022. Allison financed $45,800,000, and the note agreement will require $11.80 million in annual payments starting on December 31, 2022, and continuing for a total of four more years (final payment on December 31, 2026). Keystone Finance will charge Allison Freight Services the market interest rate of 8.5% compounded annually. After the first payment was made, the note payable liability on December 31, 2022, is closest to: a) $39,652,500 b) $46,920,000 c) $34,825,000 d) $37,893,000
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