If a $6,000, one-year, non-interest-bearing note is issued by a borrower, how much cash is received by the borrower?
A)$6,000
B)Less than $6,000
C)More than $6,000
D)Notes cannot be issued without an interest rate

Question

Quizplus · Accepted Answer

Since the note is non-interest-bearing, the borrower receives less than the face value ($6,000) upfront. The difference between the amount received and the face value represents the interest cost.

If a $6,000, One-Year, Non-Interest-Bearing Note Is Issued by a Borrower