On January 1, a Company Borrowed $70,000 Cash by Signing

Essay

On January 1, a company borrowed $70,000 cash by signing a 9% installment note that is to be repaid with 4 equal year-end payments of $21,607. The amount borrowed is $70,000 and 4 years of interest on $70,000 at 9% equals $25,200, for a total of $95,200, yet the total payments on the note amount to only $86,428. Explain.