A loan of $45,000 at 8% compounded quarterly is to be amortized over four years with equal payments made at the end of every three months. How much interest will be paid over the entire amortization period?

Question

Quizplus · Accepted Answer

The correct answer is A because the total interest paid over the entire amortization period is $8,028. This can be calculated using the formula: Total interest = Loan amount * (Interest rate / Number of compounding periods per year) * (Number of years * Number of compounding periods per year) - Loan amount. In this case, the loan amount is $45,000, the interest rate is 8%, the number of compounding periods per year is 4, and the number of years is 4. Plugging these values into the formula, we get: Total interest = $45,000 * (0.08 / 4) * (4 * 4) - $45,000 = $8,028.

A Loan of $45,000 at 8% Compounded Quarterly Is to Be