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13. On October 1, a $30,000, 6%, 3-year installment note payable is issued by a company....

13. On October 1, a $30,000, 6%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest be paid at the end of each year on September 30. The present value of an annuity factor for 3 years at 6% is 2.6730. The payment will be:
A. $10,000.00.
B. $11,223.34.
C. $10,800.00.
D. $10,400.00.
E. $1,223.34.

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Answer #1

Note payable = $30,000
Interest rate = 6%
No. of payments = 3

Equal annual payment = Note payable amount / Present value annuity factor 6% 3 years
= $30,000 / 2.6730
= $11,223.34

Hence answer is b). $11,223.34

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