Question

Lucy borrows $50,000 from the Mighty Bank today, and the bank requests her to repay her loan in four equal payments along with 10% interest. Each of the four payments must be paid at the end of the next four years. What is the amount of each payment? Please round to the nearest whole number.

A) $12,500

B) $15,000

C) $16,500

D) $17,500

Answer 1

Each payment for Lucy's loan should be $13,750.

Step-by-step explanation:

To calculate the amount of each payment, we need to divide the total loan amount plus interest by the number of payments. In this case, Lucy borrowed $50,000 with a 10% interest rate, resulting in a total loan amount of $55,000. Since there are four equal payments, each payment will be $55,000 divided by 4, which is $13,750.

Therefore, the correct answer is $13,750 (D).