Question

Which interest rate and time would result in the lowest total loan repayment for a %50,000 loan earning simple interest?

A. 30 years at 3%
B.25 years at 3.5%
C.15 years at 6%
D 20 years at 4.5%

Answer 1

Answer: Choice B

Step-by-step explanation:

Convert each percentage mentioned to decimal form. Example: 3% = 0.03

Then multiply each time value with the decimal form of the interest rate.

• A) 30*0.03 = 0.9
• B) 25*0.035 = 0.875
• C) 15*0.06 = 0.9
• D) 20*0.045 = 0.9

Choice B yields the smallest result, so it will lead to the lowest amount of interest to pay on top of the principal. Therefore, option B is the best route to have the lowest total repayment.