Intercity Industries accepted a one-year, non-interest-bearing note with a $21,000 face value in exchange for goods with a sale price of $19,534.What was the implied interest rate on the note?

Question

Quizplus · Accepted Answer

The implied interest rate can be calculated using the formula: (Face Value - Sale Price) / Sale Price. Here, it is ($21,000 - $19,534) / $19,534 = 0.075 or 7.5%.

Intercity Industries Accepted a One-Year, Non-Interest-Bearing Note with a $21,000