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Sweet Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2025, to expand its production capacity to meet customers' demand for its product. Sweet issues an $600, 000, 5-year, zero - interest - bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 7% . The company will pay off the note in five $120, 000 instalments due at the end of each year over the life of the note.