On January 1, 2021, Daniel Faust loaned $112,695 cash to Joyce Ladd in the form of a zero-interest-bearing note (face amount, $150,000). The note is to be repaid on December 31, 2023. The prevailing rate of interest for a loan of this type is 10%, and the present value of $150,000 at 10% for three years is $112,695. 

What amount of interest expense should Ms. Ladd recognize in 2021, to the nearest dollar?

Answer rating: 100% (QA)

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