Alpha Company Has Arranged to Borrow $30,000 for 8 Years

question 5

Essay

Alpha Company has arranged to borrow $30,000 for 8 years at an annual interest rate of 6%.Annual payments of $4,831.08 will be made.When Alpha makes its first payment at the end of the loan's first year:
1.how much of the payment will be interest?
2.how much of the payment will be used to reduce the principal of the loan?

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Definitions:

Surplus

In economic terms, a situation where the quantity of a good or service available exceeds the quantity demanded at a specific price.

Binding Price Floor

A government or regulatory-imposed price control set above the equilibrium price, which prevents the market price from falling below that level.

Potential Sellers

Potential sellers are individuals or entities that may be willing to sell goods or services under the right conditions.

Price Floor

A government-imposed minimum price charged on a product, below which it cannot be sold to prevent market prices from falling too low.