On December 30, 2010, AGH, Inc. purchased a machine from Grant Corp. in exchange for a zero-interest-bearing note requiring eight payments of $50,000. The first payment was made on December 30, 2010, and the others are due annually on December 30. At date of issuance, the prevailing rate of interest for this type of note was 11%. Present value factors are as follows:
Present Value of Ordinary Present Value of Period Annuity of 1 at 11% Annuity Due of 1 at 11%
7 4.712 5.231
8 5.146 5.712
On AGH's December 31, 2010 balance sheet, the net note payable to Grant is:
a) $285,600.
b) $235,600.
c) $257,300.
d) $261,775.