Knowledge Check 01 Turing City, Inc., purchased equipment and agreed to pay the supplier $500 per month for 10 months and an additional $5,000 at the end of 10 months. The supplier is charging 12% interest per year, or 1% per month. What is the amount of the liability that should be recorded on the date the note is signed

The amount of the liability that should be recorded on the date the note is signed is $9262.

Explanation:

present value of monthly payments

= $500*9.47130

= $4736

present value of additional payment

= 5000*0.90529

= $4526

present value of note =

= $4736 + $4526

= $9262

Therefore, The amount of the liability that should be recorded on the date the note is signed is $9262.