Homework SourseHarriet Corp borrowed 200000 from the first state bank The n
Harriet Corp borrowed $200,000 from the first state bank. The note issued by Harriet carried an interest rate of 8% fixed, and interest. If the annual installments of principal and interest. If the annual payments are $29,806 , what is the interest expense for: a) the first year and b) the second year?
Harriet Corp borrowed $200,000 from the first state bank. The note issued by Harriet carried an interest rate of 8% fixed, and interest. If the annual installments of principal and interest. If the annual payments are $29,806 , what is the interest expense for: a) the first year and b) the second year?
Solution
Interest expense for the first year=$200,000*8%
=$16000
Hence prinicpal reduction for the first year=(29806-16000)=$13806
Hence principal balance after the first year=(200,000-13806)=$186194
Hence interest expense for the second year=$186194*0.08
=$14895.52
