If you take out a loan for $2,000 at an annual interest rate of 10%, how much interest will you pay each year?

Question

BlackTom AI · Accepted Answer

To analyze the problem, start by identifying the loan amount and the annual interest rate.
Option A ($100.00) would correspond to an interest rate of 5% on the $2,000 loan, since 0.05 × 2000 = 100. This does not match the given 10% rate.
Option B ($200.00) matches the 10% annual interest: 0.10 × 2000 = 200. This is the standard annual interest calculation for a simple interest loan.
Option C ($20.00) would imply a 1% interest rate on the $2,000 loan, because 0.01 × 2000 = 20. A 1% rate would contradict the stated 10% rate.
Option D ($2,000.00) would be equal to the principal itself, which would be the total amount borrowed, not the yearly interest. This misunderstands how interest is computed.
Putting it together, the only amount that aligns with a 10% annual interest on a $2,000 loan is $200.00, since interest per year is computed as principal × rate, i.e., 2000 × 0.10 = 200.

GBUS4330W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser

If you take out a loan for $2,000 at an annual interest rate of 10%, how much interest will you pay each year?

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GBUS*4330*W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser

If you take out a loan for $2,000 at an annual interest rate of 10%, how much interest will you pay each year?

View Explanation

Log in for full answers

Similar Questions

Simple interest grows exponentially over time.

If you had a loan for $30,000 at an annual interest rate of 8 percent with a 90-day interest prepayment penalty, what would be the amount of your penalty?

A Term Deposit of $7 200 was taken out on 1 July 2018. Interest is earned at 5% per annum. Interest is payable on 30 September and 30 March each year. What amount of interest will be received as a cash receipt from the Bank on 30 March 2019?

Eunchae invested $2,000 six years ago at 4.5 percent interest. She spends all of her interest earnings immediately so she only receives interest on her initial $2,000 investment. Which type of interest is she earning?

Eunchae invested $2,000 six years ago at 4.5 percent interest. She spends all of her interest earnings immediately so she only receives interest on her initial $2,000 investment. Which type of interest is she earning?

How much money will you accumulate in 119 days, if you invest $9,000 today at an interest rate of 4% per year ? Round your answer to 2 decimal places (If the answer is 6.59871 -> enter as 6.60)

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More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

GBUS4330W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser