Question

Clarissa needs a $2,500 loan in order to buy a car. Which loan option would allow her to pay the least amount of interest?

Answer 1

Answer:

Option A.

Step-by-step explanation:

Clarissa needs a $2,500 loan in order to buy a car.

There are 4 options of loan we will calculate all the options that pay the least amount of interest.

To calculate the interest we will use this formula :

$\frac{P\times R\times time}{100}$

Where P = Principal amount

R = rate of interest

T = time in years

A) Principal 2,500 interest 4.75% and time 18 months (1.5 years)

$\frac{2500\times 4.75\times 1.5}{100}$

= $178.125

B) Principal 2,500 interest 4% and time 30 months (2.5 years)

$\frac{2500\times 4\times 2.5}{100}$

= $250

C) Principal 2,500 interest 4.25% and time 24 months (2 years)

$\frac{2500\times 4.25\times 2}{100}$

= $212.50

D) Principal 2,500 interest 4.50% and time 36 months (3 years)

$\frac{2500\times 4.5\times 3}{100}$

= $337.50

The least amount of interest would be in option A.