ABC Auditor has agreed to perform an inventory count for XYZ on 12/31/Y1, but will allow them to pay over time. Before they agree with the note terms, they are considering several options.

XYZs normal borrowing rate is 6%. For each option determine service revenue at 12/31/Y1 and interest revenue at 12/31/Y3, and answer the additional questions below. The PV of an ordinary annuity table for .5% is provided below. For all other factors use the PV tables in your book - do not round factors in your initial calculation.

Period	0.5%
36	32.87102
48	42.58032
60	51.72556

1. ABC will require XYZ to pay a down payment of $15,000 at 12/31/Y1 and the remainder in the form of a $35,000 note, at 14% interest, due $12/31/Y6. Interest will be due semi-annually. Calculate:

Service Revenue for 12/31/Y1:

How much Interest Revenue was recorded year to date at 12/31/Y3: