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Knowledge Check 01 Turing City, Inc., purchased equipment and agreed to pay the supplier $500 per month for 10 months and an additional $5,000 at the end of 10 months. The supplier is charging 12% interest per year, or 1% per month. What is the amount of the liability that should be recorded on the date the note is signed

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Karabo99

Answer:

The amount of the liability that should be recorded on the date the note is signed is $9262.

Explanation:

present value of monthly payments

= $500*9.47130

= $4736

present value of additional payment

= 5000*0.90529

= $4526

present value of note =

= $4736 + $4526

= $9262

Therefore, The amount of the liability that should be recorded on the date the note is signed is $9262.

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