Question

andie needs to borrow $6,000 to buy a car. one dealer offers her a monthly payment of $193.60 on a 3-year loan with an apr of 10 percent while another dealer offers her a monthly payment of $158.00 on a 4-year loan with an apr of 12 percent. if she can afford to make either payment, which loan costs less overall?

Answer 1

Given the above stated information, the the correction options is C. Three year loan costs less than 4 year loan.

What is a the calculations justifying the above answer?

The computation is executed using excel. Here is the explanation for same:

• There are two loan choices available. We must calculate the total payments for both alternatives and choose the one with the lowest cost.
• The first option is to pay $193.60 per month with 10% interest for 3 years.
• The second option is to pay $158 per month for four years at 12% interest.
• Total cost for option 1 is $969.60.
• Total cost for option 2 is $1584.00.

Hence from

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