Final answer:
To evaluate the more advantageous loan option, monthly payments and overall costs for both alternatives should be calculated using a present value formula. Higher interest and longer term in Alternative 1 will likely result in higher total loan cost than the lower interest shorter-term Alternative 2.
Step-by-step explanation:
An investor's decision between two financing options for purchasing a property can significantly impact the overall financial outcome. To evaluate which loan option is more advantageous, we can calculate the monthly payments and total cost for Alternative 1 and Alternative 2 using the present value formula for an annuity. For Alternative 1, a $280,000 loan at 9.8% interest for 20 years requires using the formula PV = R[1 - (1 + i)^-n]/i, where PV is the loan amount, R is the monthly payment, i is the monthly interest rate, and n is the total number of payments. Similarly, for Alternative 2, a $210,000 loan at 7.2% interest for 15 years, the same formula applies.
Without performing the exact calculations, we can analyze that a higher interest rate over a longer period (Alternative 1) will likely result in a higher total cost of the loan compared to a lower interest rate over a shorter period (Alternative 2). Moreover, the monthly payments for Alternative 1 might be lower due to the longer term, but the total interest paid will be substantial over 20 years. On the other hand, Alternative 2 has higher monthly payments due to the shorter term, but the total interest paid will be less compared to Alternative 1.