Rush Corporation borrowed $50,000 on January 1,2012.The loan is for a five-year period and has an annual interest rate of 8%.At the end of each year,Rush will make a payment of $12,522.82,which includes both principal and interest.With this loan,the amount of interest expense that Rush reports on its income statement will be the same for each year of the loan.

Question

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The interest expense will decrease each year as the principal balance of the loan decreases with each payment.

Rush Corporation Borrowed $50,000 on January 1,2012