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Dan Dayle started a business by issuing an $87,000 face value note to First State Bank on January 1, Year 1. The note had an
Dan Dayle started a business by issuing an $87,000 face value note to First State Bank on January 1, Year 1. The note had an 7 percent annual rate of interest and a five-year term. Payments of $21,218 are to be made each December 31 for five years.
Required
- What portion of the December 31, Year 1, payment is applied to interest expense and principal?
- What is the principal balance on January 1, Year 2?
- What portion of the December 31, Year 2, payment is applied to interest expense and principal? (Round your answers to the nearest dollar amount.)
\begin{tabular}{|c|l|} \hline & \\ \hline a. & Interest expense \\ \hline & Principal \\ \hline b. & Principal balance \\ \hline c. & Interest expense \\ \hline & Principal \\ \hline \end{tabular}
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