You sold a car and accepted a note with the following cash flow stream as your payment.What was the effective price you received for the car assuming an interest rate of 13.0%?

A) $5,267
B) $5,064
C) $5,672
D) $6,330
E) $4,304

Question

You sold a car and accepted a note with the following cash flow stream as your payment.What was the effective price you received for the car assuming an interest rate of 13.0%? ​

A) $5,267 
B) $5,064 
C) $5,672 
D) $6,330 
E) $4,304

Quizplus · Accepted Answer

To find the effective price received for the car, we need to calculate the present value of the cash flow stream using the given interest rate of 13.0%. Using a financial calculator or Excel, we find that the present value is $5,064. Therefore, the effective price received for the car is $5,064. Option B is the best choice.

You Sold a Car and Accepted a Note with the Following