Locklear Inc. borrowed $100,000 from a finance company on 1/1/Year1. Locklear will pay $10,000 a year until the loan is paid off (it will take more than 10 years.) . The $10,000 payments include interest at 4% annually. The first of the annual payments is made on 12/31/Year1.
Note- you do not need to use the time value tables here. $100,000 is the present value of all of the future payments at 4% interest. You are just doing a loan amortization schedule for the first 2 payments.
What is interest expense related to the note for Year1?
What is interest expense related to the note for Year2?
Show your finals answers as follows:
A. answer (just one number)
B. answer (just one number)