Related to the M metext states that the inerest rate on the lon\'s 9%, butts cal

Question

Related to the M metext states that the inerest rate on the lon's 9%, butts calculation is obviously wn ng Each monthly paymer tis$127, so to student wil be paying back $127x12-$1,524 per yar. Therefore, b ause $1,524 he pindigal of the lan 1,0 -0.1524 or 15.24%. incluted when computing the rate of iarest O A. incorrect because part of each payment is to principal and to intorest. Therefore, only a portion of the payment goes to interast, so the fu amount should not be paid OB. inomct because te stated rate on te ban is 9% which means that over though the loan is OC. oorrect because even though the stated interest rate is 9%, payments an made made with mortiy payments, the borrower s sta efetively ony charged 9%ayor which means . is oompounded more times so he ofecherato should work out to 1524% monthly D. correct because asthe student states, there is a paymont of $1,524 per year that works out to 1524%. 8 20 p FS 000 FA

Explanation / Answer

Option A

The calculation is incorrect because amount is divided by the principal and instead only the interest rate should be divided by the principal.

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