Question

Island Corporation owes Mutual Bank a 10% note payable for $100,000 plus $8,000 accrued interest. On October 1, 2018, Island and Mutual Bank execute an agreement whereby Island will pay Mutual $128,000 on the due date of the note on October 1, 2020. If the present value interest factor for two years at 10% is .82645, what will be the new note receivable balance for Mutual Bank

Answer 1

Answer:

$105,785

Explanation:

Calculation to determine what will be the new note receivable balance for Mutual Bank

Using this formula

New note receivable balance=Island payment to mutual*Present value interest factor

Let plug in the formula

New note receivable balance=128,000*.82645

New note receivable balance=$105,785

Therefore what will be the new note receivable balance for Mutual Bank is $105,785