On December 1, Year 1, Bradley Corporation incurs a 15-year $270,000 mortgage li
ID: 2503235 • Letter: O
Question
On December 1, Year 1, Bradley Corporation incurs a 15-year $270,000 mortgage liability in conjunction with the acquisition of an office building. This mortgage is payable in monthly installments of $2,200, which include interest computed at the rate of 8% per year. The first monthly payment is made on December 31, Year 1.
How much of the first payment made on December 31, Year 1, represents interest expense?
a) $2,200
b) $1,800
c) $1,440
d) $400
Over the 15-year life of the mortgage, the total amount Bradley will pay for interest charges is:
a) $270,000.
b) $126,000.
c) $330,000.
d) $396,000.
On December 1, Year 1, Bradley Corporation incurs a 15-year $270,000 mortgage liability in conjunction with the acquisition of an office building. This mortgage is payable in monthly installments of $2,200, which include interest computed at the rate of 8% per year. The first monthly payment is made on December 31, Year 1.
Explanation / Answer
Interest is 270,000*.08/12= 1,800. so b)
Total payments are 2200*180= 396,000-270,000(principal)= 126,000 so b)
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