On December 31, 2020, Grouper Company signed a $1,049,400 note to Monty Bank. The market interest rate at that time was 10%. The stated interest rate on the note was 8%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Grouper's financial situation worsened. On December 31, 2022, Monty Bank determined that it was probable that the company would pay back only $629,640 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,049,400 loan.

On December 31, 2020, Grouper Company signed a $1,049,400 note to Monty Bank. The market interest rate at that time was 10%. The stated interest rate on the note was 8%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Grouper's financial situation worsened. On December 31, 2022, Monty Bank determined that it was probable that the company would pay back only $629,640 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,049,400 loan.

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

On December 31, 2020, Grouper Company signed a $1,049,400 note to Monty Bank. The market interest rate at that time was 10%.
The stated interest rate on the note was 8%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales,
Grouper's financial situation worsened. On December 31, 2022, Monty Bank determined that it was probable that the company would
pay back only $629,640 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based
on the $1,049,400 loan.
(a)
Your answer is incorrect.
Determine the amount of cash Grouper received from the loan on December 31, 2020. (Round present value factors to 5 decimal
places, e.g. 0.52513 and final answer to O decimal places, e.g. 5,275.)
Amount of cash Grouper received from the loan $

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