A company purchased land by signing a note with the seller, requiring down payment of P100,000, payment of P120,000 one year from purchase, and P80,000 three years from purchase. The note is non-interest bearing, but the going rate of similar notes is 10%. Present value of 1 at 10% for 1 period is 0.91. Present value of 1 at 10% for 3 periods is 0.75.
A company purchased land by signing a note with the seller, requiring down payment of P100,000, payment of P120,000 one year from purchase, and P80,000 three years from purchase. The note is non-interest bearing, but the going rate of similar notes is 10%. Present value of 1 at 10% for 1 period is 0.91. Present value of 1 at 10% for 3 periods is 0.75.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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22. A company purchased land by signing a note with the seller, requiring down payment of P100,000, payment of P120,000 one year from purchase, and P80,000 three years from purchase. The note is non-interest bearing, but the going rate of similar notes is 10%. Present value of 1 at 10% for 1 period is 0.91. Present value of 1 at 10% for 3 periods is 0.75.
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