A single-payment note promises $67,280 at maturity. The issuer of the note exchanges it for land with a fair market value of $50,000. The exchange occurs two years before the maturity date on the note.

a. What interest rate will the accounting impute for this single-payment note?

b. Using this imputed interest rate (called the implicit rate in the text), construct an amortization schedule for the note. Show book value of the note at the start of each year, interest for each year, the amount reducing or increasing book value each year, and book value at the end of the year.

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