Curtis Builders is borrowing $140,000 today for 5 years. The loan is an interest-only loan with an APR of 9.5 percent. Payments are to be made annually. What is the amount of the first annual payment?

Question

Quizplus · Accepted Answer

The correct answer is A. The amount of the first annual payment is $13,300.00. This is because the loan is an interest-only loan, which means that the borrower only has to pay the interest on the loan each year. The interest on the loan is calculated by multiplying the principal amount of the loan by the annual percentage rate (APR). In this case, the principal amount of the loan is $140,000 and the APR is 9.5 percent. Therefore, the interest on the loan is $140,000 x 0.095 = $13,300.00.

Curtis Builders Is Borrowing $140,000 Today for 5 Years