A $50,000, 5% loan is repaid in equal annual installments of $11,549. The year-1 payment includes $2,500 interest. What principal balance remains after the first payment?

1. The principal reduction is the payment minus the interest portion. 2. Reduction: \$11{,}549 - \$2{,}500 = \$9{,}049. 3. Remaining balance: \$50{,}000 - \$9{,}049 = \$40{,}951. 4. Option D ($31,450) is the balance after the second payment, not the first. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §5.3 "Long-Term Note Payable", p.218_