<u>Answer a.
</u>
Principal Balance, Jan. 1, 2018 = $80,000
Interest Expense = $80,000 * 8%
Interest Expense = $6,400
Annual Payment = $20,037
Principal Repaid = $20,037 - $6,400
<u>Principal Repaid = $13,637
</u>
<u>
</u>
<u>Answer b.
</u>
Principal Balance, Jan. 1, 2019 = Principal Balance, Jan. 1, 2018 - Principal Repaid
Principal Balance, Jan. 1, 2019 = $80,000 - $13,637
<u>Principal Balance, Jan. 1, 2019 = $66,363
</u>
<u>Answer c.
</u>
Principal Balance, Jan. 1, 2019 = $66,363
Interest Expense = $66,363 * 8%
Interest Expense = $5,309
Annual Payment = $20,037
Principal Repaid = $20,037 - $5,309
<u>Principal Repaid = $14,725</u>