On 1 December, Year 1, Bradley Corporation incurs a 15-year $200 million mortgage liability in conjunction with the acquisition of an office building. This mortgage is payable in monthly installments of $2.4 million, which include interest computed at the rate of 12% per year. The first monthly payment is made on 31 December, Year 1.
-Over the 15-year life of the mortgage, the total amount Bradley will pay for interest charges is:

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The total amount of interest charges over the 15-year life of the mortgage is $232 million. This is calculated as follows:Total interest charges = Total payments - Principal amountTotal payments = Monthly payment x Number of paymentsMonthly payment = $2.4 millionNumber of payments = 15 years x 12 months per year = 180 monthsTotal payments = $2.4 million x 180 months = $432 millionPrincipal amount = $200 millionTotal interest charges = $432 million - $200 million = $232 million

On 1 December, Year 1, Bradley Corporation Incurs a 15-Year