A bank makes an auto loan for $10,000 at an annual rate of 6 percent. Assuming no repayment is made at all during the period, after two years the borrower will owe:

Question

Quizplus · Accepted Answer

After the first year, the borrower will owe $10,600 ($10,000 + $600 interest). After the second year, the borrower will owe $11,236 ($10,600 + $636 interest). This is calculated by taking the amount owed after year one and adding the interest for year two ($10,600 x 0.06 = $636). Therefore, the answer is C.

A Bank Makes an Auto Loan for $10,000 at an Annual