On January 1, 2014, the Minton Company borrowed $174,000 cash from the Hometown

Question

On January 1, 2014, the Minton Company borrowed $174,000 cash from the Hometown Bank by issuing a five-year 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, 2014. The annual payment on the loan was $40,875.
The amount of principal repayment included in the December 31, 2014 payment is: On January 1, 2014, the Minton Company borrowed $174,000 cas payments beginning on December 31, 2014. The annual payment The amount of principal repayment included in the December 31, O $13,920 O $26,955. O $37605 O $40,875 .

Explanation / Answer

Amount of Principal Repayment ;-

= $40875 - ($174000*8%)

= $40875 - $13920

= $26955

The Answer is "B"

B. $26955

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