On September 1, 2012, Company B signed a $7,392, two-year non-interest-bearing note payable in full on August 31, 2014.Company B received $6,000 cash.What was the yield or effective rate of interest?
A)11 percent
B)18 percent
C)23 percent
D)14 percent

Question

Quizplus · Accepted Answer

The effective interest rate can be calculated using the formula for present value of a single sum: PV = FV / (1 + r)^n. Here, PV = $6,000, FV = $7,392, and n = 2 years. Solving for r gives approximately 11%.

On September 1, 2012, Company B Signed a $7,392, Two-Year