Answer:
The multiple choices are:
A.
$1,000,000.
B.
$2,790,800.
C.$3790, 800.
D.$4,000,000
The correct optio is C,$3790, 800.
Explanation:
The interest expense on the loan is usually the opening balance multiplied by the market rate interest which is 10% in this question.
In addition,we can deduct the annual repayment in order to know the closing balance of the loan.
Year opening bal interest expense at10% repayment closing bal.
2019 $37,908,000 $3,790,800 $4,000,000
The closing balance is $37,908,000+ $3,790,800-$4000,000
The interest expense is 10% of the present value of $37.908,000 that is $ 3,790,800.00
