Refer to Shady Equipment.How much interest expense will Shady report over the term of the contract?
A)$16,640
B)$66,640
C)$50,000
D)$36,640

Question

Quizplus · Accepted Answer

The correct answer is A because the interest expense is calculated as the difference between the total payments and the principal amount of the loan. In this case, the total payments are $86,640 and the principal amount is $50,000, so the interest expense is $86,640 - $50,000 = $36,640.