Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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On January 1, YR01, Toyota Co. issued a two-year $1,000 note payable. The note bears interest
of 7% paid yearly each December 31st. In addition, the principal amount will be paid back in two
installments as follows: $400 will be paid back with the interest payment on December 31, YR01
and $600 will be paid back with the interest payment on December 31, YR02. At the date the
note was issued, the market rate for similar notes payable was 6%. What is the present value of
the note payable at the issue date of January 1, YR01 (assume an annual discounting period and
round your final answer to the nearest penny)? a. $1,000.00 b. $1,014.77 c. $1,026.25 d. $
1, 103.23 e. None of the answers provided are correct
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Transcribed Image Text:On January 1, YR01, Toyota Co. issued a two-year $1,000 note payable. The note bears interest of 7% paid yearly each December 31st. In addition, the principal amount will be paid back in two installments as follows: $400 will be paid back with the interest payment on December 31, YR01 and $600 will be paid back with the interest payment on December 31, YR02. At the date the note was issued, the market rate for similar notes payable was 6%. What is the present value of the note payable at the issue date of January 1, YR01 (assume an annual discounting period and round your final answer to the nearest penny)? a. $1,000.00 b. $1,014.77 c. $1,026.25 d. $ 1, 103.23 e. None of the answers provided are correct
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