On January 2,20x5,Clair Inc.signed a 9% mortgage payable for $200,000 with equal monthly payments of $2,400.When Clair makes the first payment,how much interest expense will be recorded?

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Quizplus · Accepted Answer

The interest expense for the first payment can be calculated by applying the annual interest rate to the principal amount. The annual interest rate is 9%, so for one month, it's 9%/12 = 0.75%. Applying this monthly rate to the principal amount of $200,000 gives $200,000 * 0.75% = $1,500.