Current Attempt in Progress

On December $31,2023,$ Oriole Bank enters into a debt restructuring agreement with Sage Hill Inc., which is now experiencing financial trouble. The bank agrees to restructure a $$2\mathrm{.}4-$million, $11\%$ note receivable issued at par by the following modifications:

Reducing the principal obligation from $$2\mathrm{.}4$ million to $$2\mathrm{.}28$ million

Extending the maturity date from December $31,2023,$ to December $31,2026$

Reducing the interest rate from $11\%$ to $9\%$

Sage Hill pays interest at the end of each year. On January $1,2027,$ Sage Hill Inc. pays $$2\mathrm{.}28$ million in cash to Oriole Bank. Oriole Bank prepares financial statements in accordance with IFRS $9.$ There is no evidence of a significant increase in credit risk and $12-$month expected credited losses are calculated at zero. For simplicity, assume that Oriole Bank had not recognized any impairment prior to this $($although it likely would have done so under to expected loss model$).$

Click here to view the factor table PRESENT VALUE OF $1.$

Click here to view the factor table$-$PRESENT VALUE OF AN ANNUITY OF $1.$

$($a$).$

What interest rate should Oriole Bank use to calculate the loss on the debt restructuring?

Interest rate

$\%$