Suppose You Borrowed $12,000 at a Rate of 9

question 158

Multiple Choice

Suppose you borrowed $12,000 at a rate of 9.0% and must repay it in 4 equal installments at the end of each of the next 4 years.How large would your payments be?

• A) $3,704.02
• B) $3,889.23
• C) $4,083.69
• D) $4,287.87
• E) $4,502.26

---

Definitions:

Straight-Line Method

A method of calculating depreciation of an asset by evenly spreading the cost over its useful life.

Bond Interest Expense

The cost incurred by an issuer of bonds for paying interest to bondholders, typically recognized over the life of the bonds.

Adjusting Entry

A journal entry made at the end of an accounting period to update the accounts for accurate financial reporting.

Straight-Line Method

The straight-line method is a depreciation technique that allocates an equal portion of the cost of an asset to each accounting period over its useful life.