Question

Prepare a table showing notes payable blance and interest expense for each year ( year 1 through 8)

Risoner company plant to purchase a machine with the following condition:

* purchases price = $300,000

* the down payment = 10% of purchase price with reminder financed at an annual interest rate of 16%

* The financing period is 8 year with equal annual payment made every year.

* the present value of an annuity of $1 per year at 16% is 4.3436

* the present value of $1 due at the end of 8year at 16% is .3050

please show the work

Sheet3 Sheet Sheet2 End of year Balance Notes Payable End of year Payment Beginning of year Notes Payable Annual interest expense Enter as negative amount Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Ok if less than 10 ra

Answer 1

Year	Beginning of the year Notes Payable	Annual Interest Expense @ 16%	End of the year payment	Ending of the year Notes Payable
Year 1	$                                                                                         270,000.00	$                            43,200.00	$                                            (62,160.00)	$               251,040.00
Year 2	$                                                                                         251,040.00	$                            40,166.40	$                                            (62,160.00)	$               229,046.40
Year 3	$                                                                                         229,046.40	$                            36,647.42	$                                            (62,160.00)	$               203,533.82
Year 4	$                                                                                         203,533.82	$                            32,565.41	$                                            (62,160.00)	$               173,939.24
Year 5	$                                                                                         173,939.24	$                            27,830.28	$                                            (62,160.00)	$               139,609.51
Year 6	$                                                                                         139,609.51	$                            22,337.52	$                                            (62,160.00)	$                  99,787.04
Year 7	$                                                                                           99,787.04	$                            15,965.93	$                                            (62,160.00)	$                  53,592.96
Year 8	$                                                                                           53,592.96	$                               8,574.87	$                                            (62,160.00)	$                            7.84
Working Note 1-	Calculation of Note Payable at the beginning of Year 1
	Purchase Price	=	$                                            300,000.00
Less:-	Down payment ( 10% of Purchase price)	=	$                                               30,000.00
	Note Payable Year 1 Beginning	=	$                                            270,000.00
Working Note 2:-	Calculation of Equivalent Annual Installment
=	Note Payable
	Annuity Factor ( 16%, 8 Years)
=	$ 2,70,000
	4.3436
=	$62,160.00