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How do I calculate the discount factor on a zero interest bearing note? 600,000 12% interest for 3 periods

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

How do I calculate the discount factor on a zero interest bearing note?

600,000

12% interest for 3 periods

Thank you

Expert Solution

Step 1

The formula for calculating the discount factor is given below:

Step 2

The calculation of the discount factor is given below:

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