Buffon Electronics Company issues a $1,500,000, 10%, 20-year mortgage note on January 1. The terms provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $87,414. After the first installment payment, the principal balance is

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The first installment payment includes interest and principal repayment. The interest for the first period is $75,000 (10% annual rate on $1,500,000, divided by 2 for semiannual). The principal repayment is $87,414 - $75,000 = $12,414. The new principal balance is $1,500,000 - $12,414 = $1,487,586.

Buffon Electronics Company Issues a $1,500,000, 10%, 20-Year Mortgage Note