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30 December, 23:57

On December 1, 2018, Garden Products borrowed $92,000 on a 5%, 10-year note with annual installment payments of $9,200 plus interest due on December 1 of each subsequent year. Which of the following describes the first installment payment made on December 1, 2019? (Round your answer to the nearest whole number O A. $4,600 interest only O B. $9,200 principal plus $460 interest O C. $9,200 principal plus $4,600 interest O D. $9,200 principal plus $9,200 interest

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  1. 31 December, 00:21
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    C. $9,200 principal plus $4,600 interest

    Explanation:

    For computing the first installment payment, first, we have to compute the interest amount because the first installment is a sum of a principal + interest. So, the interest would be

    = Borrowed amount * rate

    = $92,000 * 5%

    = $4,600

    So, the first installment would be

    = Principal + interest

    = $9,200 + $4,600

    = $13,800

    The 10-year time duration is ignored because we have to compute for December 1 and the same date is given in the question in which the annual installment payment is due. Hence, it is not considered in the computation part.
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