What Is the Amount of Interest and Repayment of Principal

question 54

Multiple Choice

What is the amount of interest and repayment of principal balance in month 2 for a loan of $10,000, paid monthly over five years at a 7 percent APR?

• A) Interest = $101.32, Principal repayment = $57.51
• B) Interest = $57.52, Principal repayment = $140.49
• C) Interest = $157.52, Principal repayment = $40.49
• D) Interest = $107.52, Principal repayment = $40.49

---

Definitions:

Inoculation

A way of making people resistant to persuasion. By providing them with a diluted counter-argument, they can build up effective refutations to a later, stronger argument.

Reactance

Brehm’s theory that people try to protect their freedom to act. When they perceive that this freedom has been curtailed, they will act to regain it.

Inoculation Effect

A social psychology theory that suggests exposure to a weakened form of an argument increases later resistance to that argument.

Analogy

A comparison between two things, typically for the purpose of explanation or clarification.