Wellington company borrowed an amount of money from ZER Finance Co. In return, ZER Finance Co received a $ 600,000, 4 year, 6% note from Wellington. On the date of the transaction, the market rate on interest was 8% for a similar note.

Instructions:

By the end of the first year, the "Discount on N\R" account will be debited by how much amount on the books of ZER Finance. Zer Finance is using the effective interest method for amortization.

The following information might help you:

Present value of a future sum factor, 6%, 4 years= 0.7921

Present value of a future sum factor, 8%, 4 years= 0.7350

Present value of an ordinary annuity factor, 6%, 4

years= 3.5

Present value of an ordinary annuity factor, 8%, 4 years= 3.3