Given the Following Information from an Amortization Table, Compute the Interest

question 130

Multiple Choice

Given the following information from an amortization table, compute the interest expense and the carrying value for the next line of the table, rounding your answer to the nearest dollar: $$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } 2 \% \text { Cash } \\\text { Interest }\end{array} & \begin{array} { c } 1 \% \text { Effective } \\\text { Interest }\end{array} & \begin{array} { c } \text { Premium } \\\text { Amortization }\end{array} & \begin{array} { c } \text { Carrying } \\\text { Value }\end{array} \\\hline \$ 800 & \$ 412 & \$ 388 & \$ 40,812 \\\hline\end{array}$$

• A) Interest Expense $408; Carrying Value $40,420
• B) Interest Expense $408; Carrying Value $41,220
• C) Interest Expense $412; Carrying Value $40,420
• D) Interest Expense $412; Carrying Value $41,220

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Definitions:

Demand Function

A mathematical representation showing the relationship between the quantity demanded of a good and its price, along with other determinants.

Marginal Cost

Additional cost incurred by increasing product or service production by one unit, emphasizing the concept of incremental expenditure.

Constant Marginal Cost

A situation in production where the cost to produce one additional unit of output remains the same, regardless of the volume produced.

Reaction Function

In economic models, this function represents how one player's strategy responds to the strategies of other players in a strategic game.