Bay Lake Mining Ltd. purchases earth-moving equipment on 1 August 20X6 and signs a three-year note with the supplier, agreeing to pay $430,000 on 31 July 20X9. There is no interest in the note. The equipment purchased does not have a readily determinable market value. (PV of $1. PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Does Bay Lake Mining Ltd. actually have a no-interest loan? 1-b. This part of the question is not part of your Connect assignment. 2. Calculate the present value of the note payable, using an interest rate of 7%. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.) Yes No Present value Year Answer is complete and correct. $ 1 2 3 3. This part of the question is not part of your Connect assignment. 4. Prepare a table that shows the balance of the note payable and interest expense over the life of the note. (Round your final answers to the nearest dollar amount.) 351,008 Answer is complete and correct. Interest Expense @ Market Rate Opening Net Liability $ 351,008 $ 375,579 401,870 24,571 26,291 28,130 Closing Net Liability $375,579 401,870 430,000
Bay Lake Mining Ltd. purchases earth-moving equipment on 1 August 20X6 and signs a three-year note with the supplier, agreeing to pay $430,000 on 31 July 20X9. There is no interest in the note. The equipment purchased does not have a readily determinable market value. (PV of $1. PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Does Bay Lake Mining Ltd. actually have a no-interest loan? 1-b. This part of the question is not part of your Connect assignment. 2. Calculate the present value of the note payable, using an interest rate of 7%. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.) Yes No Present value Year Answer is complete and correct. $ 1 2 3 3. This part of the question is not part of your Connect assignment. 4. Prepare a table that shows the balance of the note payable and interest expense over the life of the note. (Round your final answers to the nearest dollar amount.) 351,008 Answer is complete and correct. Interest Expense @ Market Rate Opening Net Liability $ 351,008 $ 375,579 401,870 24,571 26,291 28,130 Closing Net Liability $375,579 401,870 430,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Bay Lake Mining Ltd. purchases earth-moving equipment on 1 August 20X6 and signs a three-year note with the supplier, agreeing to
pay $430,000 on 31 July 20X9. There is no interest in the note. The equipment purchased does not have a readily determinable
market value. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.)
Required:
1-a. Does Bay Lake Mining Ltd. actually have a no-interest loan?
1-b. This part of the question is not part of your Connect assignment.
2. Calculate the present value of the note payable, using an interest rate of 7%. (Round time value factor to 5 decimal places and
final answer to the nearest dollar amount.)
Yes
No
Present value
Year
1
2
3
Answer is complete and correct.
$
3. This part of the question is not part of your Connect assignment.
4. Prepare a table that shows the balance of the note payable and interest expense over the life of the note. (Round your final
answers to the nearest dollar amount.)
لنا
351,008
Answer is complete and correct.
Interest
Expense @
Market
Rate
Opening
Net
Liability
$ 351,008
375,579
401,870
$
24,571
26,291
28,130
Closing
Net
Liability
$ 375,579
401,870
430,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 2 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education