The question is incomplete. The complete question is :
Carl and Sure are planning to buy a new home. They will both retire in 16 years and do not want to have a house payment at that time. Which offer should they choose?
Offer 1 Offer 2
Rate: 7% Rate: 6%
Time(years): 30 Time (years): 25
Loan Amount: $200,000 Loan Amount: $200,000
Monthly Payment: $1,330.60 Monthly Payment: $1,288.60
Total Financed:$479,017.80 Total Financed: $386,580.84
Offer 3
Rate: 5%
Time (years): 15
Loan Amount: $200,000
Monthly Payment: $1581.59
Total Financed: $284,685.71
Solution :
It is given in the question that Carl and Sue are planning to purchase a new house for them. Both of them are going to retire after 16 years from now and they do not want to have any house loan to pay at their retirement time.
So from the offers, Carl and Sue should take the Offer 3 to buy a home for them. This is because rate of interest for the loan amount is less as compared to the other two offers and also loan will be completed within 15 years from now. So they will not have any loan payment at their retirement period.
Therefore, they should choose Offer 3.
