At what amount should this building be capitalized

Reference no: EM131410542

Morrow Enterprises purchased a building on January 1, 2012, in exchange for a three-year, non-interest-bearing note with a face value of $693,000. Independent appraisers valued the building at $550,125.

a. At what amount should this building be capitalized?

b. Compute the present value of the note's future cash flows, using the following discount rates:

(1) 6 percent

(2) 8 percent

(3) 10 percent

c. What is the effective interest rate of this note?

d. Explain how one could more quickly compute the effective interest rate on the note.

Reference no: EM131410542

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