Answer:
$118,690.27
Explanation:
The value of the non-interest-bearing note at the inception is the present value of the amount receivable in 5 years using the comparable borrowing rate as the discount rate as computed thus:
PV=FV/(1+r)^n
PV is the value of debt at inception which is unknown
FV is the value of the debt after 5 years which is $200,000
r is the comparable borrowing rate of 11%
n is the number of years before the debt matures i.e 5 years
PV=200,000/(1+11%)^5
PV=$118,690.27
