Question

record the 5% interest payable on the $90,000 four year note drawn on january 1, year 1, requiring four annual payments of $25,381.

Answer 1

To calculate the interest payable on the $90,000 four-year note, we need to first find the total amount of payments due over the four years.

Each year, the payment due is $25,381. So, over four years, the total payment due would be:

Total payment = $25,381 x 4 = $101,524

Now, to calculate the interest payable on this amount, we need to subtract the original principal of $90,000 from the total payment:

Interest payable = Total payment - Principal

Interest payable = $101,524 - $90,000

Interest payable = $11,524

Finally, to calculate the 5% interest payable on this amount, we simply multiply by 0.05:

5% interest payable = $11,524 x 0.05 = $576.20

Therefore, the interest payable on the $90,000 four-year note at 5% interest is $576.20.