On December 30, 2006, Chang Co. sold a machine to Door Co. in exchange for a noninterest-bearing note requiring ten annual payments of $10,000. Door made the first payment on December 30, 2006. The market interest rate for similar notes at date of issuance was 8%. Information on present value factors is as follows:
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|
Period |
Present value of $1 at 8% |
Present value of ordinary annuity of $1 at 8% |
|
9 |
0.50 |
6.25 |
|
10 |
0.46 |
6.71 |
In its December 31, 2006 balance sheet, what amount should Chang report as note receivable?
- $45,000
- $46,000
- $62,500
- $67,100