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dfrtgyuhijfghj4794
18.02.2021 • 
Business

The text states that the interest rate on the loan is​ 9%, but this calculation is obviously wrong. Each monthly payment is $127​, so the student will be paying back $127×12=$1,524 per year.​ Therefore, because the principal of the loan is $10,000​, the interest rate must be $1,524 $10,000=0.1524 or 15.24%. The above student statement​ is: A. incorrect because part of each payment is to principal and to interest.​ Therefore, only a portion of the payment goes to​ interest, so the full amount should not be included when computing the rate of interest paid. B. correct because as the student​ states, there is a payment of $1,524 per year that works out to​ 15.24%. C. incorrect because the stated rate on the loan is​ 9% which means that even though the loan is made with monthly​ payments, the borrower is still effectively only charged​ 9% a year. D. correct because even though the stated interest rate is​ 9%, payments are made monthly which means it is compounded more times so the effective rate should work out to​ 15.24%

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