Question

On December 31, 2017, Sage Company signed a $1,023,100 note to Pronghorn Bank. The market interest rate at that

time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Sage’s financial situation worsened. On December 31, 2019, Pronghorn Bank determined that it was probable that the company would pay back only $613,860 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,023,100 loan.(a)

Determine the amount of cash Sage received from the loan on December 31, 2017. (Round present value factors to 5 decimal places, e.g. 0.52513 and final answer to 0 decimal places, e.g. 5,275.)

Amount of cash Sage received from the loan”

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