Compute the Present Value of a 150-Day Non-Interest-Bearing Promissory Note

question 26

Essay

Compute the present value of a 150-day non-interest-bearing promissory note for $5000 dated June 15, if the note was sold on August 21 and money is worth 6.5%.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Fiscal Year

A twelve-month period used for accounting purposes and preparing financial statements, not necessarily aligning with the calendar year.

Indirect Method

A way to present the cash flow from operating activities by starting with net income and adjusting for changes in balance sheet items.

Operating Activities

Operating activities are daily business functions related to producing and selling goods or services, which are reflected in a company's cash flow.