Pampanga Company is a dealer in equipment. On December 31, 2021, the entity sold an equipment in exchange for a non-interest-bearing note requiring five annual payments of 500,000. The first payment...

Pampanga Company is a dealer in equipment. On December 31, 2021, the entity sold an equipment in exchange for a non-interest-bearing note requiring five annual payments of 500,000. The first payment was made on December 31, 2022.

The market interest for similar notes was 8%. The PV of 1 at 8% for 5 periods is 0.68 and the PV of an ordinary annuity of 1 at 8% for 5 periods is 3.99.

On December 31, 2021, what is the carrying amount of the note receivable?
a. 2,500,000
b. 1,995,000
c. 1,700,000
d. 1,495,000