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On June 1, 2020, Blue Spruce Corporation approached Silverman Corporation about buying a parcel of undeveloped land. Silverman was asking $246,000 for the land and Blue Spruce saw that there was some flexibility in the asking price. Blue Spruce did not have enough money to make a cash offer to Silverman and proposed to give, in return for the land, a $305,000, five-year promissory note that bears interest at the rate of 4%. The interest is to be paid annually to Silverman Corporation on June 1 of each of the next five years. Silverman insisted that the note taken in return become a mortgage note. Silverman accepted the amended offer, and Blue Spruce signed a mortgage note for $305,000 due June 1, 2025. Blue Spruce would have had to pay 10% at its local bank if it were to borrow the cash for the land purchase. Silverman, on the other hand, could borrow the funds at 9%. Both Blue Spruce and Silverman have calendar year ends. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the purchase price of the land and prepare an effective interest amortization table for the term of the mortgage note payable that is given in the exchange. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to decimal places, eg. 5,275.) Purchase price of the land Mortgage Note Payable - Interest Amortization Note Carrying Ama Interest Expense Discount Amortized Date Cash Paid June 1 2020 June 1 2021 $ $ $ June 1 2022 June 1 2023 June 1 2024 June 1 2025

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