Question

*multiple choice*

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? Show your work.
A. $200
B. $400
C. $600
D. $2,400

Answer 1

I am almost 100% sure that the answer you were looking for is C

Answer 2

C. $600

Explanation:

I = Prt . . . . . P is the principal amount, r is the interest rate, t is the period (years)

I = $30,000×0.08×90/360 . . . . . assuming ordinary interest

... = $30,000×0.02 = $600

The penalty of 90 days's interest is $600.