On January 1, year 2, Connor Corporation signed a $100,000 noninterest-bearing note due in three years at a discount rate of 10% Connor elects to use the fair value option for reporting its financial liabilities. On December 31, year 2, Connor's credit rating and risk factors indicated that the rate of interest applicable to its borrowings was 9%. The present value factors at 10% and 9% are presented below. PV factor 10%, 3 periods .751 PV factor 826 10%, 2 periods PV factor .909 10%, 1 periods PV factor .772 9%,3 periods PV factor 842