On January 1 of Year 1, Stealth Company sold a machine (classified as inventory) that had a list price of $21,600. The customer paid $3,600 cash and signed a three-year, $18,000 note that specified a stated rate of 3%. Annual interest on the full amount of the principal is payable each December 31. The principal is payable on December 31, three years later. The market rate for a note of this risk is 10%. Required a. Compute the present value of this note.
On January 1 of Year 1, Stealth Company sold a machine (classified as inventory) that had a list price of $21,600. The customer paid $3,600 cash and signed a three-year, $18,000 note that specified a stated rate of 3%. Annual interest on the full amount of the principal is payable each December 31. The principal is payable on December 31, three years later. The market rate for a note of this risk is 10%. Required a. Compute the present value of this note.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1 of Year 1, Stealth Company sold a
machine (classified as inventory) that had a list
price of $21,600. The customer paid $3,600 cash
and signed a three-year, $18,000 note that
specified a stated rate of 3%. Annual interest on
the full amount of the principal is payable each
December 31. The principal is payable on
December 31, three years later. The market rate
for a note of this risk is 10%.
Required
a. Compute the present value of this note.
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