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30 December, 15:19

A company borrowed cash from the bank and signed a 6-year note at 7% annual interest. The present value for an annuity (series of payments) at 7% for 6 years is 4.7665. The present value of 1 (single sum) at 7% for 6 years is 0.6663. Each annual payment equals $8,400. The present value of the note is:

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  1. 30 December, 15:32
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    Present value of note = Annual payment x present value annuity factor

    Annual payment = 8,400

    PVAF = 4,7665

    = $ 8,400 x 4.7665

    = $ 40,038.60

    So, the present value of note is $ 40,038.60
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