Alden Trucking Company Is Replacing Part of Its Fleet of Trucks

Multiple Choice

Alden Trucking Company is replacing part of its fleet of trucks by purchasing them under a note agreement with Kenworthy on January 1, 2016. Alden financed $37,908,000, and the note agreement will require $10 million in annual payments starting on December 31, 2016 and continuing for a total of four more years (final payment December 31, 2020) . Kenworthy will charge Alden Trucking Company the market interest rate of 10% compounded annually. After the first payment was made, the note payable liability on December 31, 2016 is closest to:

A) $32,908,000.
B) $31,698,800.
C) $40,000,000.
D) $27,908,000.