Best's Fried Chicken just took out an interest-only loan of $50,000 for three years with an interest rate of 8.15 percent. Payments are to be made at the end of each year. What is the amount of the payment that will be due at the end of Year 3? 1. $19,454.21 2. $50,000.00 3. $52,824.60 4. $54,075.00 5. $20,166.67

Question

Business

Kinley Jensen

18 May, 07:53

Best's Fried Chicken just took out an interest-only loan of $50,000 for three years with an interest rate of 8.15 percent. Payments are to be made at the end of each year. What is the amount of the payment that will be due at the end of Year 3? 1. $19,454.21 2. $50,000.00 3. $52,824.60 4. $54,075.00 5. $20,166.67

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Answers (1)

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Albert · Answer 1

4. $54,075.00

Explanation:

The computation of the payment due is shown below:

= Loan amount for three years + Loan amount for three years * interest rate

= $50,000 + $50,000 * 8.15%

= $50,000 + $4,075

= $54,075.00

We simply added the interest and the loan amount in order to find out the total amount due at the end of year 3.

Hence, the correct answer is fourth option