$***$USE EXCEL FORMULAS

Note Receivable $(6$ Points$)$

On December $31,2019,$ Green Company finished consulting services and accepted in exchange a

promissory note with a face value of $$800,000,$ a due date of December $31,2022,$ and a stated

rate of $5\%,$ with interest due at the end of each year starting December $31,2020.$ The fair value

of the services is not readily determinable, and the note is not readily marketable. Under the

circumstances, the note is considered to have an appropriate imputed market rate of interest of

$10\%.$

a$.$ Record the journal entry required on December $31,2019$

b$.$ Record the journal entry required on December $31,2020$

Deferred Annuity $(5$ Points$)$

Carey Company owns a plot of land on which buried toxic wastes have been discovered. Since it

will require several years and a considerable sum of money before the property is fully

detoxified and capable of generating revenues, Carey wishes to sell the land now. It has located

two potential buyers: Buyer A$,$ who is willing to pay $$700,000$ for the land now, and Buyer B$,$

who is willing to make $20$ annual payments of $$110,000$ each, with the first payment to be made

$5$ years from today. Assuming that the appropriate rate of interest is $9\%,$ to whom should Carey

sell the land? Why? $($Show all calculations$).$

Time Value of Money Concepts $(10$ Points total. $5$ pts each$)$

Calculate each independent scenario:

a$$800,000$ today. The investment will earn $6\%$ for $5$ years, with no funds

withdrawn. In five years, the amount in the investment fund is:

b$$1,500,000$ in $7$ years. If the appropriate interest rate is $10\%,$ the present

value of the $$1,500,000$ receipt is: