Burlingame Co.is purchasing a new forklift to be used in its warehousing operations.Burlingame borrowed $120,000 from its bank in return for an installment note with 8% interest.Burlingame will make 6 equal annual payments of $25,958.Interest expense for the second period equals:
A)$17,667.
B)$9,600.
C)$8,291.36.
D)$25,958.

Question

Quizplus · Accepted Answer

Interest expense (first period): $120,000 × 8% = $9,600;Interest expense (second period): $120,000 − ($25,958 − $9,600)= $103,642;$103,642 × 8% = $8,291.36.