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 principal will be included in the first annual payment?

Question

Quizplus · Accepted Answer

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

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