On January 1, Year 1, Mahoney Company borrowed $175,000 cash from Sun Bank by issuing a 5-year, 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, Year 1. The annual payment on the loan equals $40,900. What is the amount of principal repayment included in the payment made on December 31, Year 1?

The answer is $26,900

Explanation:

The interest payment on $175,000 principal is:

8% x $175,000

$14,000

At the end of each year, both principal and interest payment will be paid.

The total payment for December 31, Year 1 is $40,900. Meaning this contains both the principal and interest payment.

So in the light of the above, the principal out of this money will be:

Total amount paid minus interest paid.

$40,900 - $14,000

=$26,900

Explanation:

Ok so the Taylor Rule is one kind of targeting monetary policy rule of a central bank. The Taylor rule was proposed by the American economist John B. Taylor in 1992, who is currently the George P.Shultz Senior Fellow In Economics at and the director of Standford’s Introductory Economics Centre.

Also the Taylor Rule suggests that the Federal Reserve should raise rates when inflation is above target or when gross domestic product (GDP) growth is too high and above potential. It also suggests that the Fed should lower rates when inflation is below the target level or when GDP growth is too slow and below potential.