Calculate the Interest Expense that would be due on a simple interest loan of $10,000 used to finance the inventory at Larsons Lumber Company. Assume the loan is outstanding for one year and the annual interest rate charged by First State Bank on the loan is 4%.

a. Now, assume that business has increased at Larson Lumber Company during the spring months and John Larson, the owner, is able to repay the loan after only five months. How much interest would be owed on this $10,000 loan if it is outstanding for only five months, assuming the annual 4% interest rate?