Question: Given the following information from an amortization table, compute the effective interest expense and the carrying value for the next line of the table: 2%

Given the following information from an amortization table, compute the effective interest expense and the carrying value for the next line of the table:

2% Cash Interest:$880

1% Effective Interest:$453

Premium Amortization:$427

Carrying Value:$44,867

A) Effective Interest $449; Carrying Value $43,316

B) Effective Interest $449; Carrying Value $44,436

C) Effective Interest $453; Carrying Value $45,316

D) Effective Interest $453; Carrying Value $44,436

The answer is B, but how do you figure it out?

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