Compute the maturity value of the loan

Assignment Help Accounting Basics

Reference no: EM132719721

Question - Gotham Automobiles, Inc., is a national dealership trading in spaceships and automated self-flying drones. It wishes to purchase a custom-made metal press having a market value of $1,000,000 for use in its maintenance division. GAO approached The Gotham City Industrial Bank for a ten year loan to finance the acquisition. It offered to pay coupon interest at the end of each year at an annual rate of 3%. On January 1, 2019, the Bank loaned an amount of $996,744 which, along with additional internal funds, the company used to purchase the equipment. The current market rate on that date was 8%.

On December 31, 2019, GAO recorded $79,739 to Bond Interest Expense and $39,739 to Bonds Payable in the adjusting entry prepared to record the annual accrued interest for 2019.

Compute the maturity value of the loan?

a. $450,000.

b. $1,446,744.

c. $1,298,698.

d. $1,500,000.

e. Unable to determine the amount with the given data.

Reference no: EM132719721

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