Detailed Answer
(b) The total interest revenue earned over the life of the
note equals the excess of the cash received over the cash paid to
acquire the note. The cash received over the five years is $25,045
(5 receipts of $5,009 each). The cash paid to acquire the $20,000
note was $19,485. Therefore, the total interest revenue is $5,560
($25,045 – $19,485).