Westonci.ca is the Q&A platform that connects you with experts who provide accurate and detailed answers. Get immediate answers to your questions from a wide network of experienced professionals on our Q&A platform. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.
Sagot :
Answer:
Chris should go for the LOAN THAT IS COMPOUNDED ANNUALLY because the interest rate is lower compared to the simple interest
Step-by-step explanation:
Chris borrows 450 dollars from Gavin.
Step 1
We find Simple Interest
Gavin lets Chris choose either a simple interest loan for 10 years with a 3.5% interest rate
Formula = P × R × T
= 450 × 3.5% × 10
= $157.5
Step 2
We find compound interest
loan compound annually for 7 years with a 2% interest rate.
First, convert R as a percent to r as a decimal
r = R/100
r = 3.5/100
r = 0.035 rate per year,
Then solve the equation for A
Formula:
A = P(1 + r/n)^nt
A = 450.00(1 + 0.035/1)(1)(7)
A = 450.00(1 + 0.035)(7)
A = $572.53
Interest = A - P where
P (principal) = $450.00
I = $572.53 - $450.00
I (interest) = $122.53
Which should Chris choose if he wants the cheaper plan?
Comparing the calculations above, Chris should go for the Loan that is compounded annually because the interest rate is lower compared to the simple interest
We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.
