Question 3

Solar Inc. acquired a 10 year, 5%, 150,000 mortgage payable to finance the construction of a hockey school on January 1, Year 1. If semi-annual payments are required on June 30th and December 31st of each year, what is the interest expense that we would record on December 31st Year 1 assuming a fixed principal payment of $7,500 / payment?

Select one:

a. $3,563

b. $3,686

c. $7,500

d. $3,750