Picard Orchards Requires a $100,000 Annual Loan in Order to Pay

question 73

Multiple Choice

Picard Orchards requires a $100,000 annual loan in order to pay laborers to tend and harvest its fruit crop.Picard borrows on a discount interest basis at a simple annual rate of 11 percent.If Picard must actually receive $100,000 net proceeds to finance its crop,then what must be the face value of the note?

• A) $111,000
• B) $100,000
• C) $112,360
• D) $89,000
• E) $108,840

Understand the foundations and importance of ethics in business and accounting.

Comprehend the impact of technology on accounting processes.

Grasp the basic principles and assumptions underlying financial accounting.

Identify the different entities in business and their accounting implications.

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Definitions:

Securitization

The financial practice of pooling various types of contractual debt such as mortgages and selling their related cash flows to third-party investors as securities.

Newly Created Securities

Financial instruments such as stocks or bonds that have been recently issued and are available for investment.

Original Issuer

The entity or organization that initially offers or issues a financial instrument or security to the public.

Special Relationship

A legal concept denoting a duty of care that exists between parties, beyond general public duty.