Asked by Hussain Khudair on May 13, 2024
Verified
What is the rate of interest on a $10,000 loan that is to be repaid in 10 equal annual installments of $1,917.
A) 8%
B) 10%
C) 14%
D) 16%
E) 15%
Equal Annual Installments
A method of repaying a loan in which the borrower pays the lender the same amount of money each year until the loan, including interest, is fully paid off.
- Comprehend and calculate the investment return rates and the interest rates essential for borrowing.
Verified Answer
MG
Marisol GarciaMay 14, 2024
Final Answer :
C
Explanation :
The formula to calculate the interest rate on an installment loan is:
Interest Rate = (Installment Amount x Total Number of Installments - Loan Amount) / (Loan Amount x Total Number of Installments) x 100%
Plugging in the given values:
Interest Rate = (1917 x 10 - 10000) / (10000 x 10) x 100%
Interest Rate = 14%
Therefore, the answer is (C) 14%.
Interest Rate = (Installment Amount x Total Number of Installments - Loan Amount) / (Loan Amount x Total Number of Installments) x 100%
Plugging in the given values:
Interest Rate = (1917 x 10 - 10000) / (10000 x 10) x 100%
Interest Rate = 14%
Therefore, the answer is (C) 14%.
Learning Objectives
- Comprehend and calculate the investment return rates and the interest rates essential for borrowing.
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