Question

On July 1, Shady Creek Resort borrowed $480,000 cash by signing a 10-year, 10.5% installment note requiring equal payments each June 30 of $79,803. What amount of interest expense will be included in the first annual payment?

a. $48,000
b. $29,403
c. $50,400
d. $79,803
e. $450,597

Answer 1

c. $50,400

Step-by-step explanation:

The computation of the interest expense is shown below:

= Borrowed amount × rate of interest

= $480,000 × 10.5%

= $50,400

hence, the interest expense is $50,400

Therefore the correct option is c.

We simply applied the above formula so that the correct value could come

And, the same is to be considered