Answer:
Bank A
Explanation:
To recommend from which bank Robin should borrow from, we need to calculate the interest which is the cost of borrowing from each of the banks.
Note:
Interest amount = Total amount to repay - Loan amount .................. (1)
Equation (1) is used as follows:
Bank A:
Interest = ($9,000 × 3) - $25,000 = $27,000 - $25,000 = $2,000
Interest/loan rate = ($2,000 ÷ $25,000) × 100 = 8%
Bank B:
Interest = ($7,000 × 4) - $25,000 = $28,000 - $25,000 = $3,000
Interest/loan rate = ($3,000 ÷ $25,000) × 100 = 12%
Bank C:
Interest = ($6,000 × 5) - $25,000 = $30,000 - $25,000 = $5,000
Interest/loan rate = ($5,000 ÷ $25,000) × 100 = 20%
Recommendation
Robin should borrow from Bank A since it offers the lowest loan rate of 8%.
