AsabosaAsabosa

Port Authority has had a long-term relationship with the nearby lumber company, which ships a significant amount of lumber through the port. To help finance the lumber company's operations,

AsabosaAsabosa

advanced

$ 10$10

million to the lumber company in return for a promissory note that specified payment of the

$ 10$10

million plus interest at

11 %11%

annually, due at the end of two years. However, due to adverse conditions in the lumber industry, the lumber company was unable to meet its obligation and pay

AsabosaAsabosa

at the end of two years. In light of the importance of the relationship between

AsabosaAsabosa

and the lumber company,

AsabosaAsabosa

extended the due date by three years (after the original two years) but increased the repayment amount to

$ 14$14

million, inclusive of interest. The market interest rate for the loan remained at

11 %11%.