"Angela borrowed $5,000 for five years at an APR of 6.2 percent. The loan calls for equal, annual principal payments. Interest will also be paid annually. What will be her loan payment in Year 2?"

Find below multiple choices

A: $1,248

B: $1,310

C: $1,016

D: $1,274

E: $1,157

The correct option is A,$1,248

Explanation:

The principal payment each  year is the total loan amount divided 5 i.e $5,000/5=$1,000

In year one interest=$5,000*6.2%=$310

Total principal and interest in year one=$310+$1,000=$1,310

principal  outstanding in year two=$5,000-$1,000=$4,000

year two interest payment=$4,000*6.2%=$248

Year principal interest and principal=$1,000+$248=$1,248

The total repayment in year 2 is $1,248,which is option A

answer; 20% is your answer;