Finding implicit interest rates; constructing amortization schedules. Berman Company purchased a plot of land for possible future development. The land had fair market value of $86,000. Berman Company gave a three-year interest-bearing note.

The note had face value of $100,000 and provided for interest at a stated rate of 8 percent. The note requires payments of $8,000 at the end of each of three years, the last payment coinciding with the maturity of the note's face value of $100,000.

a. What is the interest rate implicit in the note, accurate to the nearest tenth of I percent?

b. Construct an amortization schedule for the note for each year. Show the book value of the note at the start of the year, interest for the year, payment for the year, amount reducing or increasing the book value of the note for each payment, and the book value of the note at the end of each year. Use the interest rate found in part

a. See Exhibit 9.3 for an example of an amortization schedule.

(Appendix)