Exhibit 14-10 Elaine, Inc.issued a seven-year non-interest-bearing note with a face value of $20, 000 and received $11, 670.Actuarial information for seven periods is as follows:

-Refer to Exhibit 14-10.The implied interest rate is

Question

Exhibit 14-10 Elaine, Inc.issued a seven-year non-interest-bearing note with a face value of $20, 000 and received $11, 670.Actuarial information for seven periods is as follows:
 
-Refer to Exhibit 14-10.The implied interest rate is

Quizplus · Accepted Answer

The implied interest rate can be calculated using the present value of the note and the amount received. Using a financial calculator, the present value of the note is $11,670 and the future value (face value) is $20,000. The number of periods is 7. Solving for the implied interest rate gives 8%. Therefore, the best choice is C.