Dan Dayle started a business by issuing an $92,000 face value note to First State Bank...
Dan Dayle started a business by issuing an $92,000 face value note to First State Bank on January 1, 2018. The note had an 7 percent annual rate of interest and a five-year term. Payments of $22,438 are to be made each December 31 for five years.
Required
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What portion of the December 31, 2018, payment is applied to interest expense and principal?
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What is the principal balance on January 1, 2019?
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What portion of the December 31, 2019, payment is applied to interest expense and principal? (Round your answers to the nearest dollar amount.)
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Homework Answers
a) Interest expense = 92000*7% = 6440
Principal = 22438-6440 = 15998
b) Principal balance = 92000-15998 = 76002
c) Interest expense = 76002*7% = 5320
Principal = 22438-5320 = 17118
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