Question

suppose that betty takes out a loan for $300 at an annually compounded interest rate of 6 percent to be repaid after five years. how much will be required to pay off the loan at the end of the five years? group of answer choices $401.47. $390. $408.75. $393.54.

Answer 1

$401.47 will be required to pay off the loan at the end of the five years.

What is interest rate?

An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited, or borrowed.  the annual interest rate is the rate over a period of one year. Other interest rates apply over different periods, such as a month or a day, but they are usually annualized.  The interest rate has been characterized as "an index of the preference . . . for a dollar of present [income] over a dollar of future income.

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