What is imputed annual interest rate


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. 6%

B. 4%

C. 5%

D. 2%

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Accounting Basics: What is imputed annual interest rate
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