Cora got a $1200 loan for 2 years. She paid $90 in interest. What was her interest rate? (*hint: you will get a decimal as an an
1 answer:
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Answer:
D. $31,337.27
Step-by-step explanation:
We have that the initial amount of the loan is $5500.
Miranda took the loan for 4 years. So, the total present value is $5500×4 = $22,000.
The rate of interest on the loan is 7.5% i.e. 0.075 and it was for the duration of 10 years.
Also, it is given that the loan was compounded annually.
We have the formula as,
i.e.
Substituting the values, we get,
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
Thus, the total lifetime cost to pay of the loans compounded annually = 261.16 × 120 = $31,339.2
Hence, the total cost close to the answer is $31,337.27