Alden Trucking Company Is Replacing Part of Its Fleet of Trucks

question 62

Multiple Choice

Alden Trucking Company is replacing part of its fleet of trucks by purchasing them under a note agreement with Kenworthy on January 1, 2014. Alden financed $37,908,000, and the note agreement will require $10 million in annual payments starting on December 31, 2014 and continuing for a total of four more years (final payment December 31, 2018) . Kenworthy will charge Alden Trucking Company the market interest rate of 10% compounded annually. After the first payment was made, the note and interest payable liability on December 31, 2014 is closest to:

• A) $32,908,000.
• B) $31,698,800.
• C)$40,000,000.
• D)$27,908,000.