On July 1, 2012, Rentoul Inc. rendered services in exchange for a 5%, 8-year promissory note having a face value of $430,000 (interest payable annually).
On July 1, 2012, Rentoul Inc. rendered services in exchange for a 5%, 8-year promissory note having a face value of $430,000 (interest payable annually). Rentoul Inc. recently had to pay 9% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 10% interest.
Show work clearly for the following questions.
a. Determine the amount of discount for the note.
b. Determine the interest revenue that Rental would record on 12/31/2012.
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