Leaf co. purchased from oak co. a $20,000, 8%, 5-year note that required five 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 life of this note? a. $5,560b. $8,000c. $5,045d. $9,000

A. $5,560

Explanation:

The computation of the total interest revenue is shown below:

= Five-year payments received of note payable - present value of note payable

where,  

Five-year payments received of note payable =  Annual year payment received × number of years

= $5,009 × 5 years

= $25,045

And, the present value of the note payable is $19,485

Now put these values to the above formula

So, the value would equal to

= $25,045 - $19,485

= $5,560

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: