On December 31, 2021, a company sells goods to a customer, accepting $5,000 immediate cash payment...

Transcribed Image Text:

On December 31, 2021, a company sells goods to a customer, accepting $5,000 immediate cash payment and agreeing to accept the balance as a non- interest-bearing note due in four equal installments of $3,000, payable each subsequent December 31. The market rate of interest for a note of similar risk is 9%. How much interest income will the company recognize in total over the 4-year life of the note? On December 31, 2021, a company sells goods to a customer, accepting $5,000 immediate cash payment and agreeing to accept the balance as a non- interest-bearing note due in four equal installments of $3,000, payable each subsequent December 31. The market rate of interest for a note of similar risk is 9%. How much interest income will the company recognize in total over the 4-year life of the note?

Answer rating: 100% (QA)

First lets calculate the principal amount of the note The principal amount is the total amount of th... View the full answer