Homework Answers
a) annual installment payment = value of note / present value annuity factor (7%, 6 periods)
annual installment payment = $90,000 / 4.76654
annual installment payment = $18,882
b) interest expense in the first installment = $90,000 * 7% = $6,300
cash paid in the first installment = $18,882
decrease in liability in the first installment = $18,882 - $6,300 = $12,582
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