Answer:
Cameron should patronize bank 2 because they have the lowest average interest rate on loans
Explanation:
Cameron average deposit = $25000
Cameron loan = $250000
Bank 1:
interest on Cameron deposit is = 3% of $25000 = 0.03 * 25000 = $750
interest charged on loan = 6.5% of $250000 = 0.065*250000 = $16250
Bank 2
interest on deposit = 1% of $25000 = 0.01*25000 = $250
interest on loan = 2.5% of $250000 = 0.025% * 250000 = $6250
Bank 3
interest on deposit = 7% of $25000 = 0.07 * 25000 = $1750
interest on loan = 7% of $250000 = 0.07 * 250000 = $17500
Bank 4
interest on deposit = 5.5% of $25000 = 0.055 * 25000 = $1375
interest on loan = 5% of $250000 = 0.05 * 250000 = $12500
we can see from our calculations that although Bank 2 offers the least interest on deposit they also offer the least charge on loan therefore making it easier for Cameron to pay off his loan easier and faster because the difference between the deposit interest and the interest charged on loan is the least as well
