Gretchen Enterprises borrowed $149,500 for two years from the bank. At the end of the two years, they repaid the loan with one payment of $176,590. What was the interest rate on the loan?
A) 8.68%
B) 9.06%
C) 10.00%
D) 10.42%
E) 18.12%

Question

Quizplus · Accepted Answer

The correct answer is A because the interest rate on the loan was 8.68%. This can be calculated using the formula: Interest = Principal * Rate * Time, where Principal is the amount of money borrowed, Rate is the interest rate, and Time is the length of time the money is borrowed for. In this case, the Principal is $149,500, the Time is 2 years, and the Interest is $176,590 - $149,500 = $27,090. So, the Rate can be calculated as: Rate = Interest / (Principal * Time) = $27,090 / ($149,500 * 2) = 0.0868, or 8.68%.

Gretchen Enterprises Borrowed $149,500 for Two Years from the Bank