Moe borrows $10,500 from the bank at 11 percent annually compounded interest to be repaid in six equal annual installments. The interest paid in the first year is
A) $1,155
B) $2,481
C) $144
D) $1,327

Question

Quizplus · Accepted Answer

The interest paid in the first year is calculated by applying the annual interest rate to the initial loan amount. Therefore, the interest for the first year is 11% of $10,500, which is $1,155.

Moe Borrows $10,500 from the Bank at 11 Percent Annually