The Size of the Monthly Repayment That Amortizes a Loan

question 38

Multiple Choice

The size of the monthly repayment that amortizes a loan of dollars in years at an interest rate of per year, compounded monthly, on the unpaid balance is given by The value of can be found by performing the iteration A family secured a loan of $360,000 from a bank to finance the purchase of a house.They have agreed to repay the loan in equal monthly installments of $2342 over 25 years.Find the interest rate on this loan.Round the rate to one decimal place.

• A)4.1%
• B)5.1%
• C)6.1%
• D)7.1%

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Definitions:

Net Income

The amount of money left after all expenses have been deducted from total revenues.

Prepaid Expense

Expenses paid in advance by a company for goods or services to be used at a future date, recorded as an asset.

Inventory

The total amount of goods and materials held by a business for the purpose of resale or production.

Comparative Balance Sheet

A financial statement that compares balance sheets of different periods side by side, highlighting changes in assets, liabilities, and equity.