On January 1, 20X3, Carter Ltd. issued a 15-year, $600,000 note payable, with annual ﬁxed principal payments of $40,000, plus 5% interest. The cash payment for the ﬁrst year is:

Question

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The cash payment for the first year includes the fixed principal payment of $40,000 plus 5% interest on the entire $600,000 note, which is $30,000 (0.05 * $600,000). Therefore, the total cash payment is $40,000 + $30,000 = $70,000.