On July 1, 2012, Rentoul Inc. rendered services in exchange for a 5%, 8-year promissory note having a face value of $430,000 (interest payable annually). Rentoul Inc. recently had to pay 9% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 10% interest.

Show work clearly for the following questions.

a. Determine the amount of discount for the note.

b. Determine the interest revenue that Rental would record on 12/31/2012.