Exhibit 14-15
Elaine, Inc. issued a seven-year non-interest-bearing note with a face value of $20,000 and received $13,301. Actuarial information for seven periods is as follows:
-Refer to Exhibit 14-15. What is the implied interest rate?

Question

Exhibit 14-15
Elaine, Inc. issued a seven-year non-interest-bearing note with a face value of $20,000 and received $13,301. Actuarial information for seven periods is as follows: 
-Refer to Exhibit 14-15. What is the implied interest rate?

Quizplus · Accepted Answer

The implied interest rate is 6% because the present value of the future cash flows is equal to the face value of the bond.

Exhibit 14-15 Elaine, Inc. Issued a Seven-Year Non-Interest-Bearing Note with a Face