Question

Hometown Builders is borrowing $195,000 today for four years. The loan is an interest-only loan with an APR of 7.65 percent. Payments are to be made annually. What is the amount of the first annual payment

Answer 1

Answer: $14,917.50

Explanation:

Amount Borrowed = $195,000

Years = 4 Years

APR = 7.65% =0.0765

Therefore

Payment Year 1 = (Amount Borrowed x APR)

Payment Year 1 =($195,000 x 0.0765)

Payment Year 1 = $14,917.50