[The Following Information Applies to the Questions Displayed Below

question 63

Multiple Choice

[The following information applies to the questions displayed below.]

On January 1, Year 1, The Palms borrowed $200,000 to purchase a warehouse by agreeing to a 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

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Definitions:

Infant Industries

New or emerging industries in the early stages of development, often considered needing protection from international competition to grow.

Protectionism

Economic policy of restricting imports from other countries through methods such as tariffs and import quotas, to protect domestic industries.

Economics in Practice

Application of economic theories and principles to real-world scenarios and situations.

Tariff

A tax imposed on imported goods and services, which can be used to restrict trade, as they increase the cost of imported goods and services, making them more expensive to consumers.