Answer:
the amount of the interest expense associated with the second payment would be $1,954
Explanation:
According to the given data we have the following:
Amount borrowed= $28,000.00
10% interest=$28,000×0.10=$2,800
Therefore, Total outstanding at end of year 1=$28,000+$2,800
Total outstanding at end of year 1=$30,800
Sandusky agreed to repay the principal and interest by making annual payments in the amount of $11,259.21, therefore
Net balance at end of year 1= $30,800-$11,259.21
Net balance at end of year 1=$19,540.79
Hence, To calculate the amount of the interest expense associated with the second payment we would have to make the following calculation:
amount of the interest expense associated with the second payment= $19,540.79×10%=$1,954
