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 interest expense will be included in the first annual payment?

Question

Quizplus · Accepted Answer

The interest expense for the first year is calculated as 8% of the principal amount borrowed, which is $250,000. Therefore, the interest expense is $250,000 * 0.08 = $20,000.

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