Date | Cash | Interest | Amortization | Balance |
Jan. 1, year 1 | 44,799 | |||
End of year 1 | 1,980 | 1,792 | 188 | 44,611 |
End of year 2 | 1,784 | 44,415 | ||
End of year 3 | 1,777 | 203 | ||
End of year 4 | 1,768 | 44,000 |
Interest rate = Interest expense of year 1/Outstanding balance at the beginning of year 1
= 1,792/44,799
= 4%
Interest expense for year 2 = Outstanding balance at the end of year 1 x Interest rate
= 44,611 x 4%
= $1,784
Interest expense for year 3 = Outstanding balance at the end of year 2 x Interest rate
= 44,415 x 4%
= $1,777
Interest expense | |
Year 2 | $1,784 |
Year 3 | $1,777 |
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