Question

On January 1, 2017 Patrick Rockets purchased a new launcher from Martin Marietta (MM). Martin Marietta normally sells rocket launchers for 2,000. However, because Patrick Rockets is a new company they agreed to take a 150 down payment and then required Patrick to make one additional payment on December 31, 2018 of $2,600. Patrick’s a new business so the appropriate discount rate for transactions such as these is 16% and interest is to be compounded semi-annually. On 3/1/2018 MM decided to discount the note payable to Buffett Bank. Buffett Bank requires a 20% return on the notes they buy from MM.

Required (please clearly show calculations):

1.

Prepare the JE that MM would make on 1/1/2017.

Answer 1

31 m2. 13121 Wk 22. 151-214 Present Value of Payment to be mode on December 31, 2018! Rate = 16 - 8 % [1.0874 2600-19112 Cournal on 1/1/17 806 689 To sales To Crearned finance Income [Sales Recorded] MAY 2018 MTWTF 1 2 3 4 8 9 10 11 14 15 16 17 18 23 24 25