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What is the amount dubois will receive on the sale

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Reference no: EM132508542

Question 1: Dubois Inc. loans money to John Kruk Corporation in the amount of $800,000. Dubois accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Dubois needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Dubois will receive on the sale of the note?

Formula:

PV-OA=P (I OAn,i)                                             PV=FV (PVF n,i)
32,000 PVF-OA 10,5%)                                     = $800,000 (PVF 10,5%)
= $32,000 (7.72173)                                          = $800,000 (.61391)
= $247,095.36                                                     = $491,128

  • Combined present value (amount received on sale of note: $247,095.36 + $491,128 = $738,223.36

Reference no: EM132508542

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