A small business takes out a bank loan of textsterling7, 000. The loan will be repaid over 5 years, with a monthly repayment of textsterling125. The total interest the business will pay for this loan as a percentage of the total amount borrowed is:

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A small business takes out a bank loan of £7, 000. The loan will be repaid over 5 years, with a monthly repayment of £125. The total interest the business will pay for this loan as a percentage of the total amount borrowed is:

A	6.67%
B	7.14%
C	93.33%
D	98.25%

Explanation:

Detailed explanation-1: -So, to get your monthly loan payment, you must divide your interest rate by 12. Whatever figure you get, multiply it by your principal. A simpler way to look at it is monthly payment = principal x (interest rate / 12). The formula might seem complex, but it doesn’t have to be.

Detailed explanation-2: -The loan repayment period ranges between 12 months and 60 months. The lender charges a competitive rate of interest. Customised and flexible loan repayment options are offered.

Detailed explanation-3: -Interest is the monetary charge for borrowing money-generally expressed as a percentage, such as an annual percentage rate (APR). Interest may be earned by lenders for the use of their funds or paid by borrowers for the use of those funds.

There is 1 question to complete.

ECONOMICS

COST ACCOUNTING

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