On July 1, Shady Creek Resort borrowed $350,000 cash by signing a 10-year, 8.5% installment note requiring equal payments each June 30 of $53,343. What amount of interest expense will be included in the first annual payment?

$29,750

Explanation:

Given that

Borrowed amount = $350,000

Interest rate = 8.5%

The computation of interest expense is shown below:-

Interest expense in the first annual payment = Borrowed amount × Interest rate

= $350,000 × 8.5%

= $29,750

Therefore, for computing the interest expense in the first annual payment we simply multiply borrowed amount with interest rate.

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