On January 1, Year 1, the Palms Borrowed $200,000 to Purchase

question 95

Multiple Choice

On January 1, Year 1, The Palms borrowed $200,000 to purchase a warehouse by agreeing to an 8%, 5-year note with the bank. Payments of $50,091.29 are due at the end of each year. The first payment will be made on December 31, Year 1. What is the interest expense for Year 1 and Year 2, respectively? (Round your final answers to the nearest dollar.)

• A)$3,200 and $14,000
• B)$16,000 and $16,350
• C)$16,000 and $13,273
• D)$20,625 and $16,000