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Financial Accounting

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Notes Payable: Determining Interest Rate Partial Year Interest

FINACT-99SVDR

XYZ Company signs a 2-year, interest-bearing note on September 1, 20x4 for \$35,000. No interest or principal payments have been made during the year.

If XYZ reports Interest Payable in the amount of $1,400 on the Balance Sheet at December 31, 20x4, what is the annual interest rate of interest on the note?