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.Notes payable at December 31,2013 will be ________ notes payable at December 31,2012.
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 will only pay the interest each year and repay the principal at the end of the loan term, the notes payable amount will remain the same until the principal is repaid.

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 $\bold{\text{only the interest}}$