Kestrel acquires a process patent. The seller, whose usual settlement terms are 60 days, offers either a cash payment of 450,000 on signing or a single payment of 520,000 in three years. Kestrel opts for payment in three years. Determine the cost of the patent and the total interest expense to be recognised over the period of credit.
- Cash price offered
- 450,000
- Single amount payable in three years
- 520,000