Regarding zero-interest-bearing notes,
A) they do not have an interest component.
B) the debtor receives the future value of the note and pays back the present value.
C) any interest is never recognized until the note is repaid.
D) the debtor receives the present value of the note and pays back the future value.

Question

Quizplus · Accepted Answer

Zero-interest-bearing notes are issued at a discount and the debtor receives the present value of the note upfront. They pay back the face value of the note at maturity, which is the future value. There is no interest component involved in these notes.

Regarding Zero-Interest-Bearing Notes