Exhibit 16-1 You Have Just Taken Out a Loan for R75,000.The Stated

Multiple Choice

Exhibit 16-1
You have just taken out a loan for R75,000.The stated (simple) interest rate on this loan is 10 percent, and the bank requires you to maintain a compensating balance equal to 15 percent of the initial face amount of the loan.You currently have R20,000 in your checking account, and you plan to maintain this balance.The loan is an add-on installment loan which you will repay in 12 equal monthly installments, beginning at the end of the first month.
-Refer to Exhibit 16-1.How large are your monthly payments?

A) R6,250
B) R7,000
C) R7,500
D) R5,250
E) R6,875