Sage Hill Inc. commonly issues long-term notes payable to its various lenders. The company has a good credit rating. As a result, its effective borrowing rate is less than 7% on an annual basis. Sage Hill has elected to use the fair value option for the long-term notes issued to First National Bank and has the following data related to the carrying and fair value for these notes. All changes in fair value are due to changes in market rates, not credit risk. Year Ending Carrying Value Fair Value 2017 $125,100 $121.900 2018 115,500 117.900 2019 94,300 93,500