Refer to Exhibit 14-11.If the face value of a note is materially different from the cash sales price of the property it was exchanged for, and the note is recorded at its present value, the correct interest rate to use is the

A) borrower's incremental rate
B) note's stated interest rate
C) the effective interest rate
D) note's implied interest rate

Incremental Interest Rate

The interest rate used for calculating the present value of future cash flows that differ from the interest rate in the original contract.

Cash Sales Price

The amount of cash received from a transaction before any deductions, like discounts or returns.

Non-interest-bearing Note

A promissory note or loan agreement that does not require the borrower to pay interest, only to repay the principal amount.