Skett co took out a loan of $ 20,000,000 from Central Bank at the beginning of...
Skett co took out a loan of $ 20,000,000 from Central Bank at the beginning of the year. The loan terms are 10% annual interest and the loan is a three-year loan. Skett co agreed to repay the loan with an annual payment of $ 8,042,000 which is paid at the end of each year. Based on this information, Skett co charged interest will be charged in year two:
Group of answer choices
$ 8042000
$ 1395800
$ 2000000
$ 731180
Homework Answers
Interest for year 1 = $20000000* 10% = $2000000
Loan Value at the end of year 1 = $20000000+2000000-8042000 = $13958000
Interest will be charged in year two = $13958000 x 10% = $1395800
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