25.Leaf Co. purchased from Oak Co. a P20,000, 8%, five-year note that required five equal annual year-end payments of P5,009. The note was discounted to yield a 9% rate to Leaf. At the date of purchase, Leaf recorded the note at its present value of P19,485. Leaf does not elect the fair value option for reporting its financial liabilities. What should be the total interest revenue earned by Leaf over the life of this note? Ans: 5,560
25.Leaf Co. purchased from Oak Co. a P20,000, 8%, five-year note that required five equal annual year-end payments of P5,009. The note was discounted to yield a 9% rate to Leaf. At the date of purchase, Leaf recorded the note at its present value of P19,485. Leaf does not elect the fair value option for reporting its financial liabilities. What should be the total interest revenue earned by Leaf over the life of this note? Ans: 5,560
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:25.Leaf Co. purchased from Oak Co. a P20,000, 8%, five-year note that required five equal
annual year-end payments of P5,009. The note was discounted to yield a 9% rate to Leaf. At the
date of purchase, Leaf recorded the note at its present value of P19,485. Leaf does not elect the
fair value option for reporting its financial liabilities. What should be the total interest revenue
earned by Leaf over the life of this note? Ans: 5,560
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