Finance
A borrower receives a loan at a 7% annual interest rate. The interest charge for the first month on a $200,000 loan balance is:
A$1,167✓ Correct
B$14,000
C$1,400
D$583
Explanation
Monthly interest = Loan balance × (Annual rate ÷ 12) = $200,000 × (7% ÷ 12) = $200,000 × 0.005833 = $1,166.67, or approximately $1,167.
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