Question $20(2$ points$)$

Lester Company received a $7-$year, $0-$interest$-$bearing note on February $22,2014$ in

exchange for property it sold to Porter Company. There was no established exchange

price for this property and the note has no ready market. The prevailing rate of

interest for a note of this type was $7\%$ on February $22,2014,7\mathrm{.}5\%$ on December $31,$

$2014,7\mathrm{.}7\%$ on February $22,2015,$ and $8\%$ on December $31,2015.$ What interest

rate should be used to calculate the interest revenue from this transaction for the

years ended December $31,2014$ and $2015,$ respectively?

$0\%$ and $0\%.$

$7\%$ and $7\%.$

$7\%$ and $7\mathrm{.}7\%.$

$7\mathrm{.}5\%$ and $8\%.$