Carl is facing very difficult financial times and can only pay the interest on a $10,000 loan he has taken. The bank charges him a quarterly compound rate of 5%. What is the approximate interest he pays annually? Choose one:
A) $1200 B) $2000 C) $2150 D) $2500 E) $12000
since the options did not make sense with 5% annual rate of interest, it is apparent that the intent was a 5% quarterly rate. So the bank charges 5% every quarter and compounds it in the next quarter. Had it been a simple quarterly rate, we would have just found 4 * 5% of 10,000 = $2000 as our answer.   But since, the interest is compounded, it will be a bit more than $2000. Option (C) looks correct.   ANSWER:$2150
<result>C</result>
Carl is facing very difficult financial times and can only pay the interest on a $10,000 loan he has taken. The bank charges him a quarterly compound rate of 5%. What is the approximate interest he pays annually?