Table 9.2
$$\begin{array} { | l c | }
\hline \text { Cost of machine } & \$ 300,000 \
\hline \text { Arnual autput from mechine } & \$ 35,000 \
\hline \text { Arnual interett rate on loans } & 9 \% \
\hline
\end{array}$$
-Refer to Table 9.2. If a firm purchases the machine by taking out a one-year loan, how much interest will the firm have to pay?
A) $301,500
B) $30,150
C) $270,000
D) $27,000
E) $9,000

Question

Table 9.2
 $$\begin{array} { | l c | } 
\hline \text { Cost of machine } & \$ 300,000 \
\hline \text { Arnual autput from mechine } & \$ 35,000 \
\hline \text { Arnual interett rate on loans } & 9 \% \
\hline
\end{array}$$
-Refer to Table 9.2. If a firm purchases the machine by taking out a one-year loan, how much interest will the firm have to pay?
A) $301,500
B) $30,150
C) $270,000
D) $27,000
E) $9,000

Quizplus · Accepted Answer

To calculate the interest on the loan, we need to find the total amount borrowed. Since the cost of the machine is $300,000, and the firm is taking out a one-year loan, the total amount borrowed would be $300,000 plus the interest on the loan.

To find the interest on the loan, we can use the formula:

Interest = Principal x Rate x Time

In this case, the principal is $300,000, the rate is 9%, and the time is 1 year.

Plugging in the values, we get:

Interest = $300,000 x 0.09 x 1 
Interest = $27,000

Therefore, the firm will have to pay $27,000 in interest on the loan.

The best choice is D, as it is the correct answer.

Table 92 -Refer to Table 9