As discussed in class, business transactions often involve the exchange of cash, property, goods or services for a note receivable. Read the section on recognition and describe how the amount of interest is determined in the following cases:

when the entity receives a note and provides cash to the borrower.

when the entity receives a note and provides property, goods or services to the buyer.

when the entity receives a note but must determine an imputed interest rate.

2. Read pages 338-341 of your textbook to complete the following table, to determine the present value of a 5,000, 6%, 5-year notes receivable, with annual interest payments made at the end of each year. The table requires the present value of one notes receivable, but with 3 possible market interest rates as shown on the table.

Possible market interest rate	4%	6%	8%
Present value of repayment of the face amount of the note receivable at the end of 5 years.
Present value of the annual interest payments *
Total present value of the note