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On January 1of Year1,Company purchased a machine with a $6,000 loan.The loan required 5equal payments on December 31ofeach year.The annual interest rate was 6% .The

On January 1of Year1,Company purchased a machine with a $6,000 loan.The loan required 5equal payments on December 31ofeach year.The annual interest rate was 6% .The annual payment (of interest and principle) was $1,425.

In Year2, how much interest expense will Companyreport for this loan?Note, this is the SECOND year of the loan.

a.$1,425

b.$338

c.$296

d.$360

e.$225

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