On September 1, 2012, Lowe Co. issued a note payable to National Bank in the amount of $1,800,000 , bearing interest at 12%, and payable in three equal annual principal payments of $600,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2013. At December 31, 2013, Lowe should record accrued interest payable of ______________

Is there a premium on the note (since the stated rate > market rate, but calculation does not work out to a premium) ? I was trying to calculate the amortized interest for the first year (part of the first year rather), using the schedule of amortization, but could not get one of the answers from the choices it gave me. This is a sample of what I was doing. What am I doing wrong (table doesn't make sense) ?

Date	Cash Paid	Interest Exp	Premium??? Amount amortized	Carrying Amount
Sep 1, 2012	0	0	0	1,466,226
Dec 31 ,2012	72,000	53,762	18,238	1,484,464

PV-OA_11%,3 = (600,000) (PVF_11%,3) = (600,000) ( 2.44371) = 1,466,226