Answer: The monthly payment on a bank loan would be $480, which is lower than the monthly credit card payment.
To calculate the monthly payment on the bank loan, we can use the formula:
monthly payment = P * (r / (1 - (1 + r)^(-n)))
where P is the total loan amount, r is the annual interest rate as a decimal, and n is the number of months of the loan.
For a loan of $16,000 at 8% interest for 3 years (36 months)
r = 0.08/12 = 0.0067
n = 36
P = 16000
So, the monthly payment = 16000 * (0.0067 / (1 - (1 + 0.0067)^(-36))) = 480
To calculate the monthly credit card payment, we can use the formula:
M = P * r * (1 + r)^n / [(1 + r)^n - 1]
where P is the total loan amount, r is the monthly interest rate, and n is the number of months of the loan.
For a credit card with an annual rate of 15% for 7 years (84 months)
r = 0.15/12 = 0.0125
n = 84
P = 16000
So, the monthly payment = 16000 * 0.0125 * (1 + 0.0125)^84 / [(1 + 0.0125)^84 - 1] = 511.11
As we can see the monthly payment on the bank loan is lower than the monthly credit card payment. So, the correct answer is "The monthly payment on a bank loan would be $480, which is lower than the monthly credit card payment."