Question

Jayden wants to take out a loan of $2,500 with interest that compounds monthly. Use the formula A = P(1 + rn)n∗t to find which of these loan terms will have the lowest total cost.

Answer 1

$3125

Explanation:

Let,

Time = 2 years

R = 5 % = 0.5

Now,

A = 2500(1 + 0.5/2)¹

A = 2500 × (2 + 0.5/2)

A = 2500 × 2.5/2

A = 1250 × 2.5

A = $3125