Answer:
A) 2 years at 7% interest
Step-by-step explanation:
You have to use the formula to calculate the amount after a certain period of time with compound interest and that formula would be (The formula in the statement appears to be incomplete as it doesn't have the interest rate):
A=P(1+r/n)^nt, where
A= amount after time has passed
P= Principal
r= Rate expressed as a decimal
n= Number of times in a year that interest is compounded
t= Time in years
A) 2 years at 7% interest
A=$9,000*(1+0.07/12)^12*2
A=$9,000*1.1498
A=$10,348.2
B) 3 years at 6% interest
A=$9,000*(1+0.06/12)^12*3
A=$9,000*1.19668
A=$10,770.12
C) 4 years at 5% interest
A=$9,000*(1+0.05/12)^12*4
A=$9,000*1.22
A= $10,980
D) 5 years at 4% interest
A=$9,000*(1+0.04/12)^12*5
A=$9,000*1.2209
A=10,988.96
According to this, the loan term that will have the lowest cost is: A) 2 years at 7% interest because it is the one in which Angel would pay less.
