On March 1, 2018, Mandy Services issued a 3% long-term notes payable for $15,000. It is payable over a 3-year term in $5,000 principal installments on March 1 of each year, beginning March 1, 2019. Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period. What is the amount of total cash payment that Mandy will make on March 1, 2019?
Accepted Solution
A:
Answer:amount of total cash payment is $5450Step-by-step explanation:Given dataamount = $15000principal = $5000rate = 3% = 0.03to find out the amount of total cash paymentsolutionwe know according to question is Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year periodso first we calculate interest i.e.interest = rate × amountinterest = 0.03 × 15000interest = 450so interest is $450 for 1 year now we calculate the amount of total cash payment i.e.interest + principalso the amount of total cash payment = 450 +5000 = 5450amount of total cash payment is $5450