The following problem requires present value information:
Biotech sold a patent on a new blood analyzer to Pharma.The sales agreement which was signed on January 1,2009 requires Pharma to pay Biotech $1 million immediately.In addition,Pharma is required to pay $600,000 each December 31 for 20 years starting with December 31,2009.Pharma and Biotech judge that a 10 percent is an appropriate interest rate for this arrangement.
a.Compute the present value of the receivable on Biotech's books on January 1,2009 immediately after receiving the $1 million down payment.
b.Compute the present value of the receivable on Biotech's books on December 31,2009.
c.Compute the present value of the receivable on Biotech's books on December 31,2010.
Correct Answer:
Verified
The present value of an ordi...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q53: Discuss the three ways in which GAAP
Q62: Fellsmere Company's income tax return shows income
Q67: H.Solo Company purchased a new piece of
Q68: For some transactions GAAP requires that value
Q69: Discuss the two principal reasons income before
Q72: Plaxo Corporation has a tax rate of
Q75: The analytical framework used to evaluate transactions
Q75: Jurgen Company's income tax return shows income
Q76: The analytical framework used to evaluate transactions
Q80: The analytical framework used to evaluate transactions
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents