On December 31, 2014, Iva Majoli Company borrowed $64,686 from Paris Bank, signing a 5-year, $109,000 zero-interest-bearing note. The note was issued to yield 11% interest. Unfortunately, during 2016, Majoli began to experience financial difficulty. As a result, at December 31, 2016, Paris Bank determined that it was probable that it would receive back only $81,750 at maturity. The market rate of interest on loans of this nature is now 12%.