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 annual payment of $37,258 consists of both principal and interest. The interest can be calculated as 8% of $250,000, which is $20,000. Therefore, the principal portion of the payment will be the difference between the payment and the interest, which is $17,258. This is the amount of principal that will be included in the first annual payment.

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