Question

Mark went to the bank to borrow $10,000. He was given 2 options for a $10,000 loan:OPTION 1: 24-month payback at 6%interest will result in a monthly payment of $443.21 per month, or OPTION 2: 36-month payback at 6% interest will result in a monthly payment .of $304.22 per month.Which statement is NOT true?F. Mark will pay a total of $10,637.04 if he chooses Option 1.G. Mark will pay a total of $10,951.92 if hechooses Option 2.H. Mark will save $314.88 if he selects Option 2.J. Mark will pay a lower total amount if he selects Option 1.

Answer 1

Loan= $10.000

Bank options:

24-month payback 6% interest, with a monthly payment of $443.21/month

Then, Mark in option 1 will pay a total of:

`443.21\text{ x 24 months=}10,637.04\text{ in option 1. }`

36-month payback 6% interest, with a monthly payment of $304.22/month.

Mark in option 2 will pay a total of:

`304.22\text{ x 36months=}10,951.92\text{ in option 2. }`

Then, Mark will pay a lower total amount of money if he selects option 1 (10.637.04 is less than 10,951.92), saving a total of:

`10,951.92\text{ - 10.637.04= 314.88 if he chooses option 1. }`

Therefore, the statement that is NOT true is:

H. Mark will save $314.88 if he selects option 2.