If the Interest Rate Is 6 Percent, the Net Present

question 37

Multiple Choice

If the interest rate is 6 percent, the net present value of $100 to be received two years from now is

• A) $79.72.
• B) $86.
• C) $89.
• D) $100.

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Definitions:

Notes Receivable

Short-term or long-term financial assets representing the promise of another party to pay a specific sum of money at a future date.

Journal Entry

A record in accounting that notes every transaction a business makes, providing a chronological log necessary for the financial statements.

Promissory Note

A written, legal agreement where one party promises to pay another a specific sum of money on a certain date or upon demand.

Accounts Receivable

Money owed to a business by its customers for goods or services provided on credit.