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Earned Interest Revenue

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Leaf Co. purchased from Oak Co. a 20,000 8% 5-year note that required 5 equal annual year-end payments of $5,009. The note was discounted to yield a 9% rate to Leaf. At the date of purchase, Leaf recorded the note at its present value of 19,485. What should be the total interest revenue earned by Leaf over the period of this note?

a) 0
b) 5,560
c) 8,000
d) 9,000

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Solution Summary

This solution shows the exact calculation for the proper amount of total interest revenue for Leaf Co.

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