On June 1, 2011, MacDougall Corporation approached Silverman Corporation about purchasing a parcel of undeveloped land. Silverman was asking $240,000 for the land and MacDougall saw that there was some flexibility in the asking price. MacDougall did not have the necessary funds to make a cash offer to Silverman and proposed to give, in return for the land, a $300,000, five-year promissory note that bears interest at the rate of 4%. The interest is to be paid annually to Silverman Corporation on June 1 of each of the next five years. Silverman insisted that the note taken in return become a mortgage note. The amended offer was accepted by Silverman, and MacDougall signed a mortgage note for $300,000 due June 1, 2016. MacDougall would have had to pay 10% at its local bank if it were to secure the necessary cash for the land purchase. Silverman, on the other hand, could borrow the funds at 9%. Both MacDougall and Silverman have calendar year ends.