Question: On January 1 Harrison Enterprises borrowed 40 000 for three
On January 1, Harrison Enterprises borrowed $ 40,000 for three years. Harrison signed a noninterest-bearing note. Assuming that the market rate of interest is 9 percent on the date the note is made and that interest is compounded annually, what is the face value of the note? What is the amount of interest expense shown on the budgeted income statement for the first two years? Describe the cash inflows and outflows Harrison must plan for with this note.
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