Answer:
C. $144,200
Step-by-step explanation:
We have been given that a borrower's monthly interest payment on an interest-only loan at an annual interest rate of 7.3% is $877.
To find the loan amount, we will use simple interest formula.
[tex]I=Prt[/tex], where,
I = Amount of interest,
P = Principal amount,
r = Annual interest rate in decimal form,
t = Time in years.
One month will be equal to 1/12 year.
[tex]7.3\%=\frac{7.3}{100}=0.073[/tex]
Upon substituting our given values in simple interest formula, we will get:
[tex]877=P*0.073*\frac{1}{12}[/tex]
[tex]877*12=P*0.073*\frac{1}{12}*12[/tex]
[tex]10524=P*0.073[/tex]
[tex]P*0.073=10524[/tex]
[tex]\frac{P*0.073}{0.073}=\frac{10524}{0.073}[/tex]
[tex]P=144164.3835616438356[/tex]
Upon rounding to nearest hundred, we will get:
[tex]P\approx 144,200[/tex]
Therefore, the loan amount was $144,200 and option C is the correct choice.
