VB owes a $200,000, 8%, five-year note payable dated January 1, 2020.It is the end of year 2020, and instead of making the interest payment now due, VB has made arrangements to pay the debt and the 2020 interest payment in four equal instalments based on the same interest rate.The first payment is to be made on January 1, 2021.The amount of the equal annual payments is (rounded to the nearest dollar):
A)$60,384
B)$65,214
C)$54,000
D)$55,912

Question

Quizplus · Accepted Answer

The total amount owed at the end of 2020 is the principal ($200,000) plus the interest for one year (8% of $200,000 = $16,000), totaling $216,000. This amount will be paid in four equal annual installments at the same interest rate (8%). Using the formula for the payment of an annuity or an amortization calculator, the payment rounds to approximately $60,384.

VB Owes a $200,000, 8%, Five-Year Note Payable Dated January