Question

Currie Company borrowed $30,000 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 $11,852. Based on this information, the amount of the interest expense associated with the second payment would be: (Round your answer to the nearest dollar.)

Answer 1

$1,876

Step-by-step explanation:

The computation of the amount of the interest expense is shown below:-

Year Annual Interest Principal Outstanding

Payments Amount 9% Amount

0 $30,000

1 $11,852 $30,000 × 9% $11,852 - $2,700 $30,000 - $9,152

$2700 $9,152 $20,848

2 $11,852 $20,848 × 9% $11,852 - $1,876 $30,000 - $9,976

$1,876 $9,976 $20,024