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Suppose Hammer Company provided consulting services to Duder Inc. on December 31, 2012, but has decided to allow Duder to pay the balance due over
Suppose Hammer Company provided consulting services to Duder Inc. on December 31, 2012, but has decided to allow Duder to pay the balance due over time. Hammer is considering several different note options below. The market rate of interest for a company of Duder's risk level is 12%. A For each option, determine the appropriate amount of service revenue that Hammer would record on December 31, 2012 and the amount of interest revenue Hammer would record for the full year ended December 31, 2014. Use the Present Value tables provided in class, and do not round the factors. Round all answers to the nearest whole dollar (including interest and cash payments for each year in your calculation). Hammer Company opts for Option # 1 above, what is the total amount of interest revenue it will earn over the life of the note (hint: use the shortcut discussed in class)
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