Suppose Nail Consulting Co. provided consulting services to Channel Inc. on December 31, 2016, but has decided to allow Channel to pay the balance due over time. Nail Consulting is considering several different note options below. The market rate of interest for a company of Channel's risk level is 10%.

A. for each option listen below determine the appropriate amount of service revenue that Nail would record on December 31, 2016 and the amount of interest revenue Nail would record for the full year ended December 31, 2018. Use the Present value tables provided below 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).

Question 1A:

Option #1: Nail consulting Co. will require Channel Inc. to make a down payment of $30,000 on 12/31/2016 and the remainder in the form of a $90,000, 6% note due in 6 years. Interest payments will be due semi-annually.

What is the....

Service Revenue at 12/31/2016?

Interest Revenue for the year ended 12/31/2018?

Question 1B:

Option #2: Nail consulting Co. will provide the consulting services in exchange for a 4-year, $150,000 non-interest bearing note. Interest is compounded quarterly.

What is the....

Service Revenue at 12/31/2016?

Interest Revenue for the year ended 12/31/2018?

ALSO...For requirements B and C below, assume that Nail consulting chooses Option #1 listed above.

Question 2: Make an amortization table. Use the following headings:

Date: Cash: Interest Revenue: Discount Amortized: Carrying Value:

Question 3: What is the total amount of interest revenue that Nail will earn over the life of the note?

Present Value of a Single Sum Reference Table -