Carol Garcia is seeking financing for her new business venture, the development of a local ski hill. She has found two possible sources

of financing: $(1)$ a mortgage payable and $(2)$ a note payable. She can borrow $$160,000$ on January $1,2027,$ from either, but the

repayment terms differ.

Mortgage payable details: $,$$$160,000$ mortgage with an annual interest rate of $9\%.$ The loan is repayable over $5$ years in annual

installments of $$41,135,$ principal and interest, due each December $31.$ The first payment is due

December $31,2027,$ and the last on December $31,2031.$

Long$-$term note details: $,$$$160,000,5-$year note with an annual interest rate of $7\%.$ Annual interest is due each December $31.$

The principal is due January $1,2032.$

$($a$)$

Your answer is correct.

Indicate the interest expense for the year ending December $31,2027,$ assuming Garcia chooses $(1)$ the mortgage payable and $(2)$

the note payable.

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List of Accounts

$($b$)$

Your answer is incorrect.

Indicate the total cost of borrowing for each option assumed in part $($a$).$

Cost

Mortgage payable

$

Long$-$term note payable $