Alden Trucking Company is replacing part of its fleet of trucks by purchasing them under a note agreement with Kenworthy on January 1,2019.Alden financed $37,908,000,and the note agreement will require $10 million in annual payments starting on December 31,2019 and continuing for a total of four more years (final payment December 31,2023).Kenworthy will charge Alden Trucking Company the market interest rate of 10% compounded annually.
- On January 1,2019,Alden will record a note payable in the amount of:
A)$40,000,000
B)$37,908,000.
C)$41,698,000.
D)$50,000,000.

Question

Quizplus · Accepted Answer

The initial amount financed is given as $37,908,000, which is the amount of the note payable that Alden would record on January 1, 2019. Therefore, the correct answer is option B.

Alden Trucking Company Is Replacing Part of Its Fleet of Trucks