Liz Rogers just closed a $10,000 business loan that is to be repaid in three equal, annual, end-of-year payments

Finance Aug 31, 2020

Liz Rogers just closed a $10,000 business loan that is to be repaid in three equal, annual, end-of-year payments. The interest rate on the loan is 13%. As part of her firm's detailed financial planning, Liz wishes to determine the annual interest deduction attributable to the loan. (Because it is a business loan, the interest portion of each loan payment is tax-deductible to the business.)

a. Determine the firm's annual loan payment.

b. prepare an amortization schedule for the loan.

c. How much interest expense will Liz's firm have in each of the next 3 years as a result of this loan?

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