On 1 November 2013, EZ Products borrowed $48 000 on a 5%, 10- year note with annual instalment payments of $4 800 plus interest due on 1 November of each succeeding year. Which of the following describes the first instalment payment made on 1 November 2014?
A)$2 400 principal plus $2 400 interest
B)$4 800 principal plus $2 400 interest
C)$2 000 interest only
D)$4 800 principal plus $400 interest

Question

Quizplus · Accepted Answer

The first instalment payment includes the full principal payment of $4,800 plus the interest for the first year, which is 5% of $48,000, equaling $2,400.

On 1 November 2013, EZ Products Borrowed $48 000 on a 5