[Anonymous]

For those with the Wiley book, I am working SIM 1 in Module 13.C. The first part says to “Calculate the present value of the future cash flows of the restructured note.” So, I used the effective rate of interest which is 6% in my PV calculation. However, the solution says to use a 9% interest rate. Why is that? I thought I remembered Cindy (Yaeger) saying in the lecture that you should ALWAYS use the market rate of interest in PV calculations.

[greeneyesCPA]

I believe you use 9% because you are figuring out the PV of the modified principal and interest payments. You must use 9% to compare apples to apples. A gain or loss will be determined when the new PV is subtracted from the loans CV.

Effective rate is different from the effective method.

FAR Passed
BEC Passed
AUD Passed
REG Passed

[Anonymous]

I noticed Becker deleted Trouble Debt Restructuring section in FAR 2012. So it means it will not be applicable to FAR exam in 2012. So I guess this is a good news, right?

[Anonymous]

I was watching the CRAM DVD and had made a note to use some of my instructor hotline time for this exact SIM. Before the lecture was over though, Cindy said “why do you use 9% and not 6%? Because it's the rule!” So I just went with it -she never explained why but just said you have to use it.

[Author]

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