Question

trying to determine interest expense on: a 10,000 note with 6%interest made on jan 31 2017...

trying to determine interest expense on:

a 10,000 note with 6%interest made on jan 31 2017 and is due feb 1 2019. a 5 year loan was made on june 1 2017. Terms are 7.5% annual rate and interest only until due date.

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Answer #1

Particulars

Amount ($)

Interest on Note

Notes payable

     10,000.00

Annual Rate of interest

6%

Period of interest (Feb 01, 2017 to Feb 01, 2019)

2 years

Thus, interest expense (10000 x 6%) x 2

       1,200.00

Interest on 5 year loan

Amount of loan (Assumption)

     10,000.00

Annual Rate of interest

7.50%

Period of loan

5 years

Thus, interest expense (10000 x 7.5%) x 5

       3,750.00
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