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12 votes
12 votes
Esteban wants to take out a $5,000 loan from the bank and is offered two choices. If he pays the loan back within 3 years, he will make monthly payments of $148.07. If he pays the loan back within 5 years, he will make monthly payments of $92.53. How much more will he pay in interest ifhe chooses the 5-year loan???

User Anton Kashpor
by
3.2k points

2 Answers

12 votes
12 votes

Final answer:

Esteban will pay $221.28 more in interest by choosing the 5-year loan instead of the 3-year loan, after calculating the total payments and subtracting the original loan amount for each option.

Step-by-step explanation:

To determine the additional interest Esteban will pay if he chooses the 5-year loan instead of the 3-year loan, first calculate the total payments for each term and then compare the interest paid.

3-Year Loan Calculation

Total payments over 3 years: 36 months × $148.07/month = $5,330.52
Total interest paid over 3 years: $5,330.52 - $5,000 = $330.52.

5-Year Loan Calculation

Total payments over 5 years: 60 months × $92.53/month = $5,551.80
Total interest paid over 5 years: $5,551.80 - $5,000 = $551.80.

Difference in interest paid: $551.80 - $330.52 = $221.28.

Esteban will pay $221.28 more in interest if he chooses the 5-year loan over the 3-year loan.

User Sasank Mukkamala
by
3.0k points
29 votes
29 votes

Answer:

ESTEBAN IS FOKING BROKE

Step-by-step explanation:

User Jaroslav
by
3.1k points
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