If the outstanding balance on a loan at the beginning of the year is $300,000 and the yearly payment is $79,139, with an interest rate of 10%, how much of the payment amount goes towards interest and principal repayment in that year?

A. Interest Payment = $35,000 and Principal Repayment = $50,139
B. Interest Payment = $35,000 and Principal Repayment = $49,139
C. Interest Payment = $30,000 and Principal Repayment = $50,139
D. Interest Payment = $30,000 and Principal Repayment = $49,139

The annual interest payment is $30,000, which is calculated by multiplying the outstanding balance by the interest rate. The remainder of the annual loan payment after subtracting the interest amount is the principal repayment, which is $49,139. Therefore, answer D is correct.

Explanation:

This problem involves a basic understanding of how loan payments are made and divided between interest and principal repayments. Given that the outstanding balance of the loan at the start of the year is $300,000 and the interest rate is 10%, you can calculate the annual interest payment by multiplying the balance by the interest rate: $300,000 * 0.10 = $30,000.

The yearly payment of $79,139 will first cover the interest amount. So, we subtract the annual interest from the total payment: $79,139 - $30,000 = $49,139. This remaining amount is the principal repayment.

Therefore, the correct answer is D. Interest Payment= $30,000 and Principal Repayment = $49,139.

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