Q3

The following tables illustrate a loan of $1,750,000 with 5 annual payments of $415,444. The loan started on 1/1/2013. The first of 5 annual payments begain on 12/31/2013. The loan carries an annual interest rate of 6%. Using either table (each table has the same information/answers but is presented in two familiar formats) determine the amount of interest expense that would be allocated from the second annual payment. The highlighted box is the answer students should provide for this question. Professor Format Decrease Cash Interest in loan Payment Expense balance Date 1/1/2013 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 415,444 105,000 415,444 415,444 66,629 415,444 45,700 415,444 23,516 310,444 329,070 348,815 369,743 391,928 Loan Ending Balance 1,750,000 1,439,556 1,110,486 761,671 391,928 Textbook Decrease Beginning Cash Interest in loan Loan Ending Date Balance Payment Expense balance Balance 12/31/2013 1,750,000 415,444 105,000 310,444 1,439,556 12/31/2014 1,439,556 415,444 329,070 1,110,486 12/31/2015 1,110,486 415,444 66,629 348,815 761,671 12/31/2016 761,671 415,444 45,700 369,743 391,928 12/31/2017 391,928 415,444 23,516 391,928