Question

Find the present value of a non-interest-bearing seven-month promissory note for S1800 dated

August 27, 2012, on December 4, 2012, if money is then worth 8.375%.​

Answer 1

The present value of a non-interest-bearing promissory note can be calculated using the present value formula. The formula is: Present Value = Future Value / (1 + discount rate)^n. Calculating this expression will give you the present value of the promissory note.

Step-by-step explanation:

The present value of a non-interest-bearing promissory note can be calculated using the present value formula. The formula is:

Present Value = Future Value / (1 + discount rate)n

Where:

• 
  
• Future Value is the amount of money to be received in the future
• 
  
• Discount rate is the interest rate or discount rate
• 
  
• n is the number of payment periods

In this case, the future value is $1800, the discount rate is 8.375%, and the number of payment periods is 7 months.

Substituting these values into the formula:

Present Value = 1800 / (1 + 0.08375)7/12

Calculating this expression will give you the present value of the promissory note.