MathDB
Charging Loans

Source:

February 7, 2009

Problem Statement

A bank charges $6 \$6 for a loan of $120 \$120. The borrower receives $114 \$114 and repays the loan in 12 12 installments of $10 \$10 a month. The interest rate is approximately: <spanclass=latexbold>(A)</span> 5%<spanclass=latexbold>(B)</span> 6%<spanclass=latexbold>(C)</span> 7%<spanclass=latexbold>(D)</span> 9%<spanclass=latexbold>(E)</span> 15% <span class='latex-bold'>(A)</span>\ 5 \% \qquad <span class='latex-bold'>(B)</span>\ 6 \% \qquad <span class='latex-bold'>(C)</span>\ 7 \% \qquad <span class='latex-bold'>(D)</span>\ 9\% \qquad <span class='latex-bold'>(E)</span>\ 15 \%