Aunt Tilly borrows $3,500 from the bank at 12 percent annually compounded interest to be repaid in four equal annual installments. The interest paid in the first year is ________.

Question

Quizplus · Accepted Answer

The interest paid in the first year is calculated on the initial amount borrowed. Since Aunt Tilly borrows $3,500 at 12 percent annually, the first year's interest is 12% of $3,500, which is $420.

Aunt Tilly Borrows $3,500 from the Bank at 12 Percent