On January 1, 2022, Slack Company finished legal services and accepted in exchange a 5% $400,000 promissory note with a due date of December 31, 2024. Interest is receivable on January 1 of each year. Notes with similar risk have a market rate of interest of 10%. Set financial calculators to zero decimal place. Required: (a) Determine the value of the following: N = I/Y = PMT = FV = (b) The present value of the note was (c) Prepare a Schedule of Note Discount/Premium Amortization for Slack Company under the effective interest method.
On January 1, 2022, Slack Company finished legal services and accepted in exchange a 5% $400,000 promissory note with a due date of December 31, 2024. Interest is receivable on January 1 of each year. Notes with similar risk have a market rate of interest of 10%.
Set financial calculators to zero decimal place.
Required:
(a) Determine the value of the following:
N =
I/Y =
PMT =
FV =
(b) The
(c) Prepare a Schedule of Note Discount/Premium Amortization for Slack Company under the effective interest method.
A promissory note is a short-term financing means of the company, which is usually issued to fund the working capital requirements. It is basically a promise by one party to pay a certain sum at a certain date in exchange for a defined amount.
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