On July 1, Shady Creek Resort borrowed $250,000 cash by signing a 10-year, 8% installment note requiring equal payments each June 30 of $37,258. What amount of principle will be included in the first annual payment?

Question

Quizplus · Accepted Answer

The first annual payment of $37,258 includes both interest and principal. The interest for the first year is 8% of $250,000, which is $20,000. Therefore, the principal portion is $37,258 - $20,000 = $17,258.

On July 1, Shady Creek Resort Borrowed $250,000 Cash by Signing