Greenwell Farm Equipment sells a tractor to Farmer for $150,000 on January 1, 2019. The tractor is delivered that day. Greenwell agrees that the Farmer may delay the payment for 2 years. The market rate of interest is 10%. Refer to Greenwell Farms. How much sales revenue will Greenwell report on January 1, 2019? Use the formula approach.

Question

Quizplus · Accepted Answer

The sales revenue should be reported at the present value of the payment to be received. The present value of $150,000 due in 2 years at a 10% interest rate is $123,967.

Greenwell Farm Equipment Sells a Tractor to Farmer for $150,000