Exhibit 16-1 You Have Just Taken Out a Loan for $75,000. the $75,000

question 110

Multiple Choice

Exhibit 16-1
You have just taken out a loan for $75,000. The stated (simple) interest rate on this loan is 10 percent, and the bank requires you to maintain a compensating balance equal to 15 percent of the initial face amount of the loan. You currently have $20,000 in your checking account, and you plan to maintain this balance. The loan is an add-on installment loan which you will repay in 12 equal monthly installments, beginning at the end of the first month.
-Refer to Exhibit 16-1.How large are your monthly payments?

• A)$6,250
• B)$7,000
• C)$7,500
• D)$5,250
• E)$6,875

---

Definitions:

Clinical Depression

A more severe form of depression, also known as major depressive disorder, characterized by persistent feelings of sadness, loss, anger, or frustration that interfere with daily life for weeks or longer.

Excessive Worry

Persistent and uncontrollable thoughts over concerns that may be unlikely or irrational, often characteristic of anxiety disorders.

Racing Heart Rate

A rapid heartbeat, often exceeding the normal range for adults, which can be caused by physical exertion, stress, anxiety, or medical conditions.

General Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry about various aspects of daily life, not linked to any specific cause.