On January 1, 2016, the Merit Group issued to its bank a $41 million, five-year

Question

On January 1, 2016, the Merit Group issued to its bank a $41 million, five-year installment note to be paid in five equal payments at the end of each year. Installment payments of $10 million annually include interest at the rate of 7%.

What would be the amount(s) related to the note that Merit would report in its statement of cash flows for the year ended December 31, 2016? (List each cash flow separately. Let any cash outflows with a minus sign. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)

Explanation / Answer

Total Amount Payable: $41000000

Repayble in Year ending 2006: $8200000

Interest Repayment: $ 2870000 (7% of $41000000)

Reporting in Cash Flows:

Cash Flow from Financing Activities:

Repayment of Loan: -$8.20

Interest on Loan: -$2.87

Thankyou!

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