Question

Lorenzo wants to purchase a house in Atlanta that sells for $587,000. His Credit Union can lend him the money at 12% for 12 months. His bank can lend him the money at 15% for 24 months.a. How much will each loan cost?b. Which cost will cost him less?c. How much less would it cost?

Answer 1

a.

`\begin{gathered} 587000*(12)/(100) \\ =70,440 \end{gathered}`

$70,440 is the loan on 12 months by Credit union

`\begin{gathered} 587000*(15)/(100) \\ =88,050 \end{gathered}`

$88,050 is the loan on 24 months, the loan on 12 months to compare is $44,025

B.the loan by Credit union will cost less but it must be paid in less time

C.we do the subtraction of each total loan

`\begin{gathered} 88,050-70,440 \\ =17610 \end{gathered}`

the first method would cost $17,610 less