Answer:
Step-by-step explanation:
We would apply the formula for determining compound interest which is expressed as
A = P(1+r/n)^nt
Where
A = total value of the loan at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount borrowed
Considering Bank F's offer,
From the information given,
P = $16200
r = 5.7% = 5.7/100 = 0.057
n = 12 because it was compounded 12 times in a year.
t = 8 years
Therefore,
A = 16200(1 + 0.057/12)^12 × 8
A = 16200(1.00475)^96
A = $25531.2
Considering Bank G's offer,
From the information given,
P = $16200
r = 6.2% = 6.2/100 = 0.062
n = 12 because it was compounded 12 times in a year.
t = 7 years
Therefore,
A = 16200(1 + 0.062/12)^12 × 7
A = 16200(1.00517)^84
A = $24980.4
Bank G's offer is better because she would pay a lower amount of interest in total
