On August 1, a $30,000, 6%, 3-Year Installment Note Payable

question 40

Multiple Choice

On August 1, a $30,000, 6%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest each year on July 31. The present value of an annuity factor for 3 years at 6% is 2.6730. The payment each July 31 will be:

• A)$10,000.00.
• B)$11,223.34.
• C)$10,800.00.
• D)$10,400.00.
• E)$1,223.34.

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Definitions:

Stock Issuance

The process by which a company distributes new shares to investors, thereby raising capital.

Treasury Shares

Shares that were issued and subsequently reacquired by the issuing corporation, but not retired, reducing the amount of outstanding stock on the open market.

Adjusted Book Value

An asset's book value after accounting for factors like depreciation, amortization, or impairment that affect its original cost.

Primary Beneficiary

The main individual or entity designated to receive the benefits from a will, trust, insurance policy, or financial plan.