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Calculate the amount of Interest Revenue Recognized at the end of Year 1 - Quarter 2...

Calculate the amount of Interest Revenue Recognized at the end of Year 1 - Quarter 2 using the following information: $80,000 four-year note with 12% interest. The market rate is 11%. This note's payments are quarterly and interest also compounds quarterly.

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Answer #1

Interest Revenue Recognized at the end of Year 1 - Quarter 2 will be 12% interest on $82400 which comes to $ 3472 (Derived as shown below)

Interest Revenue Recognized at the end of Year 1 - Quarter 1would be 80000*12% *3/12 = $2400 , which will be compounded so princple amount to calculate  Interest Revenue Recognized at the end of Year 1 - Quarter 2 will be 80000+2400 = 82400 and  Interest Revenue Recognized at the end of Year 1 - Quarter 2 will be 82400 * 12% *3/12 = $2472.

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