Question

A homeowner is financing the cost of new windows. Two lenders have approved the homeowner for a $12,000 loan. The terms of each loan are:

Offer 1: 4.5% annual simple interest, with a total account balance of $14,430 after a 54-month term
Offer 2: 3.75% annual interest compounded monthly for a 66-month term

Assuming no payments are made, what is the difference in the account balances at the end of the loan terms. Round your answer to the nearest penny.
$204.88
$313.98
$767.12
$795.34

Answer 1

(B) $313.98

Explanation:

Using the compound interest formula:

`A=P(1+(r)/(n) )^(nt) \\\\A=12000(1+(0.0375)/(12) )^{12(5.5)\\\\`

`A= 12000(1+0.003125)^(66) \\\\A=12000(1.003125)^(66) \\\\A= 12000(1.228665)\\\\\\A= $14,743.98`

Then we minus offer 2 from offer 1

$14,743.98 - $14,430 = $313.98

Therefore, the difference in account balances at the end of the loan terms is $313.98.

Note: the 5.5 came from converting months to years so 66 months = 5.5 years.

Answer 2

not to sure but what im guesing for you is$ 204.88 maybeeeeeee

Explanation: