Kathy borrows $10,000 from the bank. For a four year loan, the bank requires annual end-of-year payments of $3,223.73. The annual interest rate on the loan is

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The correct answer is A. The annual interest rate on the loan is 11 percent.The present value of the annuity is $10,000. The annual payment is $3,223.73. The number of years is 4. The annual interest rate is 11 percent.The formula for the present value of an annuity is:PV = PMT * [1 - (1 + r)^-n] / rwhere:PV is the present valuePMT is the annual paymentr is the annual interest raten is the number of yearsSubstituting the given values into the formula, we get:$10,000 = $3,223.73 * [1 - (1 + 0.11)^-4] / 0.11Solving for r, we get:r = 0.11Therefore, the annual interest rate on the loan is 11 percent.

Kathy Borrows $10,000 from the Bank