On January 1,2012,Ace Electronics borrowed $40,000 on a five-year,7% note.Ace will pay $\bold{\text{only the interest}}$ on the loan on December 31 each year.The entire principal will be repaid on December 31,2016,the last interest payment date.Interest expense for the year ended December 31,2013 will be ________ interest expense for 2012.
A)higher than
B)the same as
C)lower than
D)The answer cannot be determined from the information given.

Question

Quizplus · Accepted Answer

Since Ace Electronics is only paying interest on the loan each year and the interest rate and principal amount are not changing, the interest expense will be the same each year. Therefore, the interest expense for 2013 will be the same as the interest expense for 2012.

On January 1,2012,Ace Electronics Borrowed $40,000 on a Five-Year,7% Note only the interest\bold{\text{only the interest}}only the interest

On January 1,2012,Ace Electronics Borrowed $40,000 on a Five-Year,7% Note $\bold{\text{only the interest}}$