Assume That You Borrow $2,000 from Your Sister and That

Multiple Choice

Assume that you borrow $2,000 from your sister and that you will pay her back in one lump sum. She charges you 9 percent interest in year 1 and increases the rate by 1 percent per year until the loan is paid off. How much will you owe if you wait until year 3 to pay off the loan?

A) $2,467.91
B) $2,661.78
C) $2,775.23
D) $2,809.53