Present and future value tables of 1 at 11% are presented below. PV of $1 FV of

Question

Present and future value tables of 1 at 11% are presented below. PV of $1 FV of $1 PVA of $1 FVA of $1 1 0.90090 1.11000 0.90090 1.0000 2 0.81162 1.23210 1.71252 2.1100 3 0.73119 1.36763 2.44371 3.3421 4 0.65873 1.51807 3.10245 4.7097 5 0.59345 1.68506 3.69590 6.2278 6 0.53464 1.87041 4.23054 7.9129 Spielberg Inc. signed a $290,000 noninterest-bearing note due in six years from a production company eager to do business. Comparable borrowings have carried an 11% interest rate. What is the value of this debt at its inception?

Explanation / Answer

present value = future value/(1+r)^n

present value = 290000/(1.11)^6 = 163697.44

present value of debt = 163697.44

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