Multiple Choice Question On January 1,2018 , Burrows, Inc. received $$ \$ 8,900 $$ and agreed to pay $$ \$ 10,000 $$ on January 1,2020 . The market rate of interest is $$ 6 \% $$ compounded annually. For the 2nd year of this note (f.e., ended December 31,2019 ), Interest Expense on this note payable equals._ (Round to the nearest $$ \$ 1 $$.) (i) $$ \$ 600 $$ O $$ \$ 0 $$ ( $$ \$ 566 $$ 0

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To calculate the Interest Expense for the second year of the note payable, we need to follow these steps:

1. **Identify the principal amount and interest rate**: 
   - The principal amount (the present value) is $$ P = 8,900 $$.
   - The future value (the amount to be paid) is $$ F = 10,000 $$.
   - The interest rate is $$ r = 6\% $$ or $$ 0.06 $$.

2. **Calculate the interest expense for the first year (2018)**:
   The interest expense for the first year can be calculated using the formula:
   $$
   \text{Interest Expense} = P \times r
   $$
   where $$ P $$ is the principal amount at the beginning of the year.

3. **Calculate the principal amount at the beginning of the second year (2019)**:
   After the first year, the principal amount will be increased by the interest expense calculated for the first year.

4. **Calculate the interest expense for the second year (2019)**:
   The interest expense for the second year will be calculated using the new principal amount at the beginning of the second year.

Let's perform these calculations step by step.

### Step 1: Calculate Interest Expense for the First Year (2018)
$$
\text{Interest Expense}_{2018} = 8,900 \times 0.06
$$

### Step 2: Calculate the Principal Amount at the Beginning of 2019
$$
\text{Principal}_{2019} = 8,900 + \text{Interest Expense}_{2018}
$$

### Step 3: Calculate Interest Expense for the Second Year (2019)
$$
\text{Interest Expense}_{2019} = \text{Principal}_{2019} \times 0.06
$$

Now, let's calculate these values.

1. Calculate the interest expense for the first year:
$$
\text{Interest Expense}_{2018} = 8,900 \times 0.06 = 534
$$

2. Calculate the principal amount at the beginning of 2019:
$$
\text{Principal}_{2019} = 8,900 + 534 = 9,434
$$

3. Calculate the interest expense for the second year:
$$
\text{Interest Expense}_{2019} = 9,434 \times 0.06
$$

Now, let's calculate the final interest expense for the second year.

$$
\text{Interest Expense}_{2019} = 9,434 \times 0.06 = 566.04
$$

Rounding to the nearest dollar, the interest expense for the second year (2019) is approximately $$ \$ 566 $$.

Thus, the answer is:
**$$ \$ 566 $$**.
The interest expense for the second year is $$ \$566 $$.

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