Your company is taking the loan of $1,260,000 for a new business plan. The interest rate is set at 6%. The entire debt must be paid in 5 years in an annuity payment plan. The Present Value Interest Factor for an Annuity (PVIFA – at 6% interest rate for 5 years) is 4.2000. (This is a simplified index to make calculation easy.)
If you make the payment of $400,000 at the end of the first year, what is the amount of the interest included in your payment? This is the first payment ever made on this debt. No other payments have been made until this payment. Do not put dollar sign ($) or a comma (,) in your answer. Put just numbers (for example, 1000 for $1,000).