A Promissory Note Has a Face Value of $5000 and It

question 20

Multiple Choice

A promissory note has a face value of $5000 and it carries an interest rate of 5% for a period of 6 months (including the period of grace) . It is sold 3 months before the legal due date. What is the present value of the note on the date of sale if money is worth 4%?

• A) $5047.26
• B) $5070.26
• C) $5074.26
• D) $5125.00
• E) $5125.26

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Definitions:

Fair Values

The valuation received for disposing of an asset or the expense of moving a liability in an organized market activity on the assessment date.

Acquisition

The process of obtaining control of another corporation, purchasing its shares, or assets, to expand or diversify operations.

Voting Common Stock

Shares that give the shareholder voting rights in corporate decisions, typically one vote per share owned.

Preferred Stock

A class of ownership in a corporation with a fixed dividend that is paid out before any dividends to common stockholders.