Question
On January 1, 2017, Ann Price loaned $233984 to Joe Kiger. A zero-interest-bearing note (face amount, $320000) was exchanged solely for cash; no other rights
On January 1, 2017, Ann Price loaned $233984 to Joe Kiger. A zero-interest-bearing note (face amount, $320000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2019. The prevailing rate of interest for a loan of this type is 11%. The present value of $320000 at 11% for three years is $233984. What amount of interest income should Ms. Price recognize in 2017?
a. $25738.
b. $105600.
c. $35200.
d. $86950.
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Advanced Accounting
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni
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