If a borrower's monthly interest payment on an interest-only loan at an annual interest rate of 7.3% is $877, how much was the loan amount (rounded to the nearest hundred)? a. $120,100b. $100,300c. $144,200d. $134,200

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.

, 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.

Upon substituting our given values in simple interest formula, we will get:

Upon rounding to nearest hundred, we will get:

Therefore, the loan amount was $144,200 and option C is the correct choice.