Blue Corp. was experiencing cash flow problems and was unable to pay its $111,000 account payable to Swifty Corp. when it fell due on September 30, 2020. Swifty agreed to substitute a one-year note for the open account. The following two options were presented to Blue by Swifty Corp.:

Option 1:		A one-year note for $111,000 due September 30, 2021. Interest at a rate of 8% would be payable at maturity.
Option 2:		A one-year noninterest-bearing note for $119,880. The implied rate of interest is 8%.

Assume that Swifty Corp. has a December 31 year end.