If you borrow $40,000 at an annual interest rate of 11% for seven years,what is the annual payment (prior to maturity)on an interest-only type of loan?
A)$4,400.00
B)$6,000.00
C)$8,333.33
D)$12,161.29

Question

Quizplus · Accepted Answer

In an interest-only loan, the borrower pays only the interest each year. The annual interest payment is calculated by multiplying the principal amount ($40,000) by the annual interest rate (11%). Therefore, the annual payment is $40,000 * 0.11 = $4,400.00.

If You Borrow $40,000 at an Annual Interest Rate of 11