On March 1, Hugh Corporation plans to borrow $560,000 from the Scotland State Bank by signing a 9%, 15-year note payable. The note calls for 180 monthly payments of $5,680, which includes both interest and principal components.

Hugh's budgeted interest expense for March is:

$5,680.

$1,480.

$4,200

$280.

Of Hugh's budgeted debt service cost of $5,680 in March, the amount applied to the principal of the note totals:

$5,680.

$4,200.

$1,480.

$280.