Question

A mortgage payable for the Inn is 3,000,000 at the beginning of the year. At the end of the year, a mortgage payment of350,000 is to be paid. The annual interest rate on this loan is 10

1) $350,000
2) $50,000
3) $35,000
4) 0

Answer 1

The interest payment on a mortgage with a principal of $3,000,000 and an annual interest rate of 10% is $300,000 for the first year. This means that out of the $350,000 mortgage payment at the end of the year, $300,000 goes towards the interest, and the remaining $50,000 is applied to the principal.

Step-by-step explanation:

To calculate the interest payment on a mortgage, you need to know the principal amount, the interest rate, and how it's applied. For this question, the mortgage payable at the beginning of the year is $3,000,000 and the annual interest rate is 10%. The interest for one year is therefore $3,000,000 * 10% = $300,000.

When a mortgage payment of $350,000 is made at the end of the year, a portion of this goes towards paying off the interest and the remainder goes towards reducing the principal. Since the interest for the year is $300,000, and the payment is $350,000, the payment covers the interest with $50,000 left over to reduce the principal. The interest portion of the first payment is thus $300,000, and the mortgage principal is reduced by $50,000 after the first payment. The interest for the year is the correct answer to the student's question.