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Baker Inc. acquired equipment from the manufacturer on 10/1/11 and gave a noninterest-bearing note in exchange. Baker is obligated to pay $918,000 on 4/1/12 to satisfy the obligation in full. If Baker accrued interest of $9,000 on the note in its 2011 year-end financial statements, what is its imputed annual interest rate?
A. 2%
B. 5%
C. 6%
D. 4%

Respuesta :

abiolataiwo2015

Answer:

D. 4%

Explanation:

Calculation to determine what is its imputed annual interest rate

Imputed annual interest rate=(2 x $9,000)/$918,000

Imputed annual interest rate=$18,000/$918,000

Imputed annual interest rate=2% for 6 months, (Approximately) or 4% annually

Therefore its imputed annual interest rate is 4% annually

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