Answer:
$409,698
Explanation:
We must first determine the the monthly payments and we can use an excel spreadsheet and the payment function:
=PMT((0.055,10,-5000000) = 663338.84 ≈ $663,339
this initial payment includes interests = ($5,000,000 x 5.5) = $275,000, and principal = $663,339 - $275,000 = $388,339
the principal balance after first payment = $5,000,000 - $388,339 = $4,611,661
now we must determine the term debt which means the amount of long term debt that will pass from long term liabilities to current liabilities because they must be paid during the period.
interest for the second year = principal balance x 5.5% = $4,611,661 x 5.5% = $253,641
principal included in the second payment = $663,339 - $253,641 = $409,698
since future interests are not included in the balance sheet, we can only pass the principal amount to current liabilities ⇒ $409,698
