on october 1, 2024, justine company purchased equipment from napa incorporated in exchange for a noninterest-bearing note payable in five equal annual payments of $500,000, beginning october 1, 2025. similar borrowings have carried an 11% interest rate. the equipment would be recorded at:

The interest rate is the quantity a lender fees a borrower and is a percent of the predominant—the amount loaned. The hobby charge on a loan is commonly referred to on an annual foundation referred to as the yearly percent charge (APR).

An interest charge tells you the way high the value of borrowing is, or high the rewards are for saving. So, in case you're a borrower, the hobby fee is the amount you are charged for borrowing money, shown as a percent of the entire quantity of the loan.

CALCULATION:

Equipment would be recorded at = $500,000 * Cumulative PV factor at 11% for 5 periods

= $500,000 * 3.69590

= $1,847,950

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