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an Dayle started a business by issuing an $94,000 face value note to First State Bank on January 1, Year 1. The note had an 6 percent annual rate of interest and a five-year term. Payments of $22,315 are to be made each December 31 for five years. Required What portion of the December 31, Year 1, payment is applied to interest expense and principal

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Parrain

Answer:

  • Interest expense = $5,640
  • Principle = $16,675

Explanation:

The interest expense for the year is;

= 6% * 94,000

= $5,640

The amount applied to Principle will be;

= Annual Payment - Interest expense

= 22,315 - 5,640

= $16,675

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