The answer would be A)20/77.
The reason is that without replacement it would go (10/22)*(12/21)=0.2597
You can do the easy route I did then do (20/77) which would also give you 0.2597.
R = monthly loan rate = 5.7 / 1200 =
<span>
<span>
<span>
0.00475
</span>
</span>
</span>
n - number of payments
p - principal
Total Loan Cost = (r * p * n) / [1-(1+r)^-n]
Total Loan Cost = (
<span>
<span>
<span>
0.00475
</span>
</span>
</span>
* 100,000 * 24) / [1 -(1<span>.00475)^-24]
</span>Total Loan Cost = 11,400 / 1 -(1.00475^-24)
Total Loan Cost = 11,400 / 1 -<span><span>.8924988049
</span>
</span><span>Total Loan Cost = 11,400 /
</span>
<span>
<span>
<span>
0.1075011951
</span>
</span>
</span>
Total Loan Cost =
<span>
<span>
<span>
106,045.33
</span>
</span>
</span>
Source:
http://www.1728.org/loanfrm4.htm