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Yvette is considering taking out a loan with a principal of $16,200 from one of two banks. Bank F charges an interest rate of 5.7%, compounded monthly, and requires that the loan be paid off in eight years. Bank G charges an interest rate of 6.2%, compounded monthly, and requires that the loan be paid off in seven years. How would you recommend that Yvette choose her loan? a. Bank F offers a better loan in every regard, so Yvette should choose it over Bank G’s. b. Yvette should choose Bank F’s loan if she cares more about lower monthly payments, and she should choose Bank G’s loan if she cares more about the lowest lifetime cost. c. Yvette should choose Bank G’s loan if she cares more about lower monthly payments, and she should choose Bank F’s loan if she cares more about the lowest lifetime cost. d. Bank G offers a better loan in every regard, so Yvette should choose it over Bank F’s.

Guest Mar 10, 2017
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Everything you say about the two loans is true!. So, what is it that you want to solve or decide? It is up to Yvette's financial cicrumstances to decide which loan to take. The overall savings between the two loans is about $200 over the liftime of loans.

1- Bank F's monthly payment is $$210.53 per month for 8 years.

2-Bank G's monthly payment is $238.21 per month for 7 years.

Guest Mar 10, 2017

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