Chippewas inc has decided to purchase equipment from central Michigan industries on January 2, 2017, to expand its production capacity to meet customers demand for its product. Chippewas issues an $800000, 5 year, zero interest bearing note to central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 12%. The company will pay off the note in five $160000 installments due at the end of each year over the life of the note.