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?

we know according to question is Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period

so first we calculate interest i.e.

interest = rate × amount

interest = 0.03 × 15000

interest = 450

so interest is $450 for 1 year

now we calculate the amount of total cash payment i.e.

interest + principal

so the amount of total cash payment = 450 +5000 = 5450

amount of total cash payment is $5450

srishtichauhansds srishtichauhansds · Answer 2 · 2019-08-03T12:27:22+02:00

Mandy will make total cash payment of [tex]\fbox{\begin{minispace}\\\$\text{ }5450\end{minispace}}[/tex] on March 1, 2019.

Further explanation:

Mandy issued a 3% long-term notes payable for [tex]\$\text{ }15000[/tex] over a 3-year term in [tex]\$\text{ }5000[/tex] principal installments on March 1 each year.

Then the interest payment for the first year will apply on total amount of [tex]\$\text{ }15000[/tex].

The formula for simple interest at principal value [tex]P[/tex] and rate percentage of [tex]R[/tex] in the time of [tex]T[/tex] years is,

[tex]\fbox{\begin{minispace}\\ \math{I}=\dfrac{P\times R\times T}{100}\\\end{minispace}}[/tex]

So, the interest amount payable at the end of one year is calculated as,

[tex]I=\dfrac{15000\times 3\times 1}{100}\\I=150\times 3\\I=450[/tex]

The total cash payment to be done by Mandy after a year on March 1, 2019, is the sum of the principal installment of [tex]\$\text{ }5000[/tex] and the interest applied on the total amount.

Hence the total cash payment is obtained as,

[tex]\fbox{\begin{minispace}\\\text{Total cash payment}=5000+450=5450\end{minispace}}[/tex]

Therefore, Mandy has to make a total payment of [tex]\fbox{\begin{minispace}\\\$\text{ }5450\end{minispace}}[/tex] on March 1, 2019.

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Answer details

Grade: High school

Subject: Mathematics

Chapter: Simple Interest

Keywords: installments, one year, Mandy, principal, long-term, payable, March 1, amount, total cash, total cash payments, each year, payments, simple interest, rate percentage, sum, total amount, time, interest applied.