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The prevailing rate of interest for this type of note

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Reference no: EM131804565

On December 30, 2017, AGH, Inc. purchased a machine from Grant Corp. in exchange for a zero-interest-bearing note requiring eight payments of $150,000. The first payment was made on December 30, 2017, and the others are due annually on December 30. At date of issuance, the prevailing rate of interest for this type of note was 11%. Present value factors are as follows:

Period Present Value of Ordinary
Annuity of 1 at 11%		 Present Value of
Annuity Due of 1 at 11%

7

4.712

5.231

8

5.146

5.712

On AGH's December 31, 2017 balance sheet, the net note payable to Grant is:

Reference no: EM131804565

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