On March 1,2015,Vantage Services issued a 5% long-term notes payable for $15,000.It is payable over a 3-year term in $5,000 principal installments on March 1 of each year,beginning March 1,2016.
-Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period.What is the amount of total cash payment that Vantage will make on March 1,2016?

Question

Quizplus · Accepted Answer

The total cash payment on March 1, 2016, includes the $5,000 principal installment and the interest for one year on the entire $15,000, which is $750 (5% of $15,000). Therefore, the total payment is $5,000 + $750 = $5,750.

On March 1,2015,Vantage Services Issued a 5% Long-Term Notes Payable