Boston Company purchased a $3,650,000 machine on January 1 of this year for $110,000 cash from the supplier. A two-year Note A is signed for 15% of the balance, and a 25 months Note B is signed for 85% of the balance. Note A will be paid in three equal year-end payments on December 31 of this year. Note B will be paid at the end of 25 months. The supplier is charging 12% interest per year. What is the total amount of interest expense that will be incurred? Do not round your intermediate calculation. Round your total interest expense to the nearest dollar.

Boston Company purchased a $3,650,000 machine on January 1 of this year for $110,000 cash from the supplier. A two-year Note A is signed for 15% of the balance, and a 25 months Note B is signed for 85% of the balance. Note A will be paid in three equal year-end payments on December 31 of this year. Note B will be paid at the end of 25 months. The supplier is charging 12% interest per year. What is the total amount of interest expense that will be incurred? Do not round your intermediate calculation. Round your total interest expense to the nearest dollar.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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