What rate of interest is being paid on the loan

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Problem - LEW Company purchased a machine at a price of $100,000 by signing a note payable, which requires a single payment of $123,210 in two years.

a. Assuming annual compounding of interest, what rate of interest is being paid on the loan? Use either a financial calculator or the Excel function Rate to calculate the rate.

b. What would be the purchase price of the machine had LEW negotiated a single payment of $120,000 in two years, using the same effective rate? To calculate, use (1) a financial calculator or (2) Excel function PV.

Reference no: EM132462263

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