On July 1, Shady Creek Resort borrowed $280,000 cash by signing a 12-year, 9.5%

Question

On July 1, Shady Creek Resort borrowed $280,000 cash by signing a 12-year, 9.5% installment note requiring equal payments each June 30 of $44,595. What amount of interest expense will be included in the first annual payment?

A.) $44,595

B.) $17,995

C.) $26,600

D.) $262,005

E.) $23,333

On July 1, Shady Creek Resort borrowed $280,000 cash by signing a 12-year, 9.5% installment note requiring equal payments each June 30 of $44,595. What amount of interest expense will be included in the first annual payment?

Explanation / Answer

Answer C - $26,600

Workings

280000*9.5/100 = 26,600

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