On November 1,2012,EZ Products borrowed $48,000 on a 5%,10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year.
-Which of the following describes the first installment payment made on November 1,2013?
A) $4,800 principal plus $2,400 interest
B) $4,800 principal plus $400 interest
C) $2,400 principal plus $2,400 interest
D) $2,000 interest only

Question

Quizplus · Accepted Answer

The first installment payment includes $4,800 of principal and $2,400 of interest. The interest is calculated as 5% of the initial loan amount ($48,000), which equals $2,400.

On November 1,2012,EZ Products Borrowed $48,000 on a 5%,10-Year Note