Suppose Mary Grace needs to borrow $8,900 for the purchase of a car and is considering two loan options. Loan A is a four-year loan at 7.6% interest while loan B is a seven-year loan at 7.9% interest. Determine the monthly payment required to repay Loan A and the total interest paid over the life of Loan A. Round solutions to the nearest cent, if necessary. The monthly payment for Loan A is $ . The total interest paid for Loan A is $ . Determine the monthly payment required to repay Loan B and the total interest paid over the life of Loan B. Round solutions to the nearest cent, if necessary. The monthly payment for Loan B is $ . The total interest paid for Loan B is $ . Determine the lower-cost option of the two loans. Loan A is the lower-cost option. Loan B is the lower cost option. Determine the amount of savings Mary Grace will experience if she chooses the lower-cost loan option. Savings = $
Suppose Mary Grace needs to borrow $8,900 for the purchase of a car and is considering two loan options. Loan A is a four-year loan at 7.6% interest while loan B is a seven-year loan at 7.9% interest.
Determine the monthly payment required to repay Loan A and the total interest paid over the life of Loan A. Round solutions to the nearest cent, if necessary.
The monthly payment for Loan A is $ .
The total interest paid for Loan A is $ .
Determine the monthly payment required to repay Loan B and the total interest paid over the life of Loan B. Round solutions to the nearest cent, if necessary.
The monthly payment for Loan B is $ .
The total interest paid for Loan B is $ .
Determine the lower-cost option of the two loans.
- Loan A is the lower-cost option.
- Loan B is the lower cost option.
Determine the amount of savings Mary Grace will experience if she chooses the lower-cost loan option.
Savings = $
Hint: Related Formula
The loan payment formula for fixed installment loans is given by the expression
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