On January 1, 2017, Ann Price loaned $216216 to Joe Kiger. A zero-interest-bearing note (face amount,...
On January 1, 2017, Ann Price loaned $216216 to Joe Kiger. A
zero-interest-bearing note (face amount, $280000) was exchanged
solely for cash; no other rights or privileges were exchanged. The
note is to be repaid on December 31, 2019. The prevailing rate of
interest for a loan of this type is 9%. The present value of
$280000 at 9% for three years is $216216. What amount of interest
income should Ms. Price recognize in 2017?
| $75600. |
| $56950. |
| $19459. |
| $25200. |
Homework Answers
| Present value of note | 216216 |
| X Interest rate | 9% |
| Interest income to be recognized in 2017 | 19459 |
| Option C $19459 is correct | |
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On January 1, 2017, Ann Price loaned $216216 to Joe Kiger. A
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