Question

"and agreed to accept a 3-month, $64,000, 15% interest-bearing note in payment at a time when the prevailing rate of interest for similar transactions was 15%. When the note was collected upon maturity, Parson would recognize interest revenue of"

Answer 1

Answer: Interest value on the note is $2,400

Explanation: Notes are investments with specified time and interest rate.

the above stated note has the following:

Principal: $64,000

Interest rate: 15%

Tenor = 3 months

Calculation of interest on principal

= 64,000* 15%*3/12

=64,000*0.15*0.25

= 2,400

Interest accrued for the period on the note is $2,400