Problem #2: Installment Note

Preferred Corporation purchases an asset and finances it with a note payable. Information regarding the transaction follows:

YOU WILL NEED THE KIESO PRESENT VALUE TABLES FOR THIS PROBLEM. Cost of asset 106,000 $

Amount Financed 106,000 $

Annual Interest Rate 12%

Installment loan term 2 years

Payments are made 4 times per year

8.) Calculate the monthly payment on the note payable. 9.) What is the total amount of interest that will be paid on the note payable over the two year period? 10.) If the company wishes to get the loan paid off in ONE year instead what will the new quarterly payments be? 11.) How much interest will they save if they pay it off in ONE year?