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Question
Cloud Yahoo Bing Wikipedia Google Facebook Twitter Linkedin The Weather Channel Yelp TripAdvisor University of West Georgia Google Yahoo Connect Currie Compuny Borrowed $13,000 From The Serra Ba -8) 6 Saved Help Save & Exit Submit Currie Company borrowed $21,000 from the Sierra Bank by issuing a 9% three-year note. Currie agreed to repay the principal and interest by making annual payments in the amount of $5,121. Based on this information, the amount of the interest expense associated with the second payment would be: (Round your answer to the nearest dollar.) Multiple Choice $1,599. $1365 $1,890 $5121.Explanation / Answer
Solution:
We need to prepare the table of principal and interest payment
Year
Beginning Balance
Interest Expenses
Principal Payment
Ending Balance
1
$21,000
$1,890
$5,121
$17,769
(21000 + 1890 – 5121)
2
$17,769
$1,599
$5,121
$14,247
3
$14,247
$1,282
$5,121
$10,408
The correct option is $1,599
The interest expense associated with the second payment would be $1,599
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Year
Beginning Balance
Interest Expenses
Principal Payment
Ending Balance
1
$21,000
$1,890
$5,121
$17,769
(21000 + 1890 – 5121)
2
$17,769
$1,599
$5,121
$14,247
3
$14,247
$1,282
$5,121
$10,408