Question

The question and the response options for Item 4 in the Costs of Borrowing Money Quick Check are:

Question
If you borrow $10,000 over five years, at the end of the five years, what will you have paid? (1 point)

Responses
( ) $2,000

( ) $10,000

( ) less than $2,000

( ) more than $10,000

Answer 1

More than $10,000.

When you borrow $10,000 you must repay the principal plus interest (and possibly fees), so total payments over five years will exceed the $10,000 borrowed (unless the interest rate and fees are zero).