Question

On January 1, 2020, Ann Price loaned $192186 to Joe Kiger. A zero-interest-bearing note (face amount, $270000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2022. The prevailing rate of interest for a loan of this type is 12%. The present value of $270000 at 12% for three years is $192186. What amount of interest income should Ms. Price recognize in 2020?

Answer 1

The amount of interest income should Ms. Price recognize in 2020 is $23,062

Step-by-step explanation:

Amount of interest income should Ms. Price recognize in 2020

= $192186*12%

= $23,062.32

= $23,062

Therefore, The amount of interest income should Ms. Price recognize in 2020 is $23,062