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Homework answers / question archive / Williams Inc
Williams Inc. purchased a piece of equipment for $850,000 on May 1, 2019, paying $80,000 in down payment and signing a note for the rest of the amount. Williams Inc. has agreed to make twenty equal quarterly payments for five years beginning August 1, 2019. The interest rate on this loan is 10%.
a. On December 31, 2019, what should be the balance in Williams Inc.'s interest payable related to this note?
b. What is the carrying value of the note on May 1, 2020 after the payment on that day has been made?
c. Assume Williams Inc. refinances the carrying value of the loan on August 1, 2021 after the payment on that date has been made. The new interest rate is 8%. What will be the size of new quarterly payments?
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