If You Borrow $11 000 for Four Years at an Annually

question 46

Multiple Choice

If you borrow $11 000 for four years at an annually compounding rate of 8.2% per annum,what is the total interest on the loan if the interest due is added to the principal over the period and repaid at the maturity date?

• A) $2933.96
• B) $3608.00
• C) $3842.51
• D) $4076.54

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Definitions:

Tax Deductible

Refers to certain expenses that individuals or businesses can subtract from their gross income to reduce taxable income, thereby lowering overall tax liability.

Defined Benefit Plan

A type of pension plan in which an employer promises a specified pension payment upon retirement, based on the employee's earnings and tenure.

Cash Balance Plan

A type of defined benefit retirement plan where employee benefits are expressed as a hypothetical account balance, making it resemble a defined contribution plan.

PBGC

Pension Benefit Guaranty Corporation, a U.S. federal agency responsible for protecting retirement incomes by insuring private-sector defined benefit pension plans.