If you borrow $10,000 with a 1% origination fee of $100, how will it affect the amount of loan money you receive and how much you must pay back later?

A. You receive $9,900, but must pay back the full $10,000 later.

B. You receive $10,100, and must pay it all back later.

C. You only have to pay back the $100 origination fee.

D. It doesn't have an impact on what you receive or pay back later.

It’s A, just took the quiz

b

The correct answer is:

A. You receive $9,900, but must pay back the full $10,000 later.

The origination fee of $100 is deducted from the initial loan amount of $10,000, resulting in you receiving $9,900. However, you still need to repay the full loan amount of $10,000 in the future.

To determine the impact of a 1% origination fee on a $10,000 loan, you can calculate the amount of money you will receive and the total amount you will have to pay back later.

An origination fee is a fee charged by lenders to cover the costs associated with processing a loan. In this case, the origination fee is 1% of the loan amount, which is $10,000. To calculate the origination fee, you can multiply $10,000 by 1% (0.01).

Origination fee = $10,000 x 0.01 = $100

Now, let's consider the options:

A. You receive $9,900, but must pay back the full $10,000 later.
B. You receive $10,100, and must pay it all back later.
C. You only have to pay back the $100 origination fee.
D. It doesn't have an impact on what you receive or pay back later.

Looking at option A, if you receive $9,900, it means that the lender has already deducted the origination fee from the loan amount. In this case, you would receive $9,900 upfront, and then have to pay back the full $10,000 later.

Option B suggests that you receive the origination fee in addition to the loan amount, resulting in you receiving $10,100 upfront. Later, you would be required to pay back the full amount, including the $100 origination fee.

Option C implies that you only need to pay back the origination fee of $100, without having to pay back the full loan amount.

Option D states that the origination fee doesn't have any impact on what you receive or have to pay back later.

The correct answer in this case is A. You receive $9,900, but must pay back the full $10,000 later. This is because the origination fee of $100 is deducted from the loan amount upfront, leaving you with $9,900 as the amount you receive, but you are still responsible for paying back the full loan amount of $10,000.