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15 December, 18:17

Kay has decided to take out a $23,100 loan, and she wants to pay it back in quarterly installments. She has narrowed her options down to two banks. Bank V offers a six-year loan with an interest rate of 4.6%, compounded quarterly, and has a service charge of $822.45. Bank W offers an eight-year loan with an interest rate of 3.9%, compounded quarterly, and a service charge of $722.25. Which loan will have the greater total finance charge, and how much greater will it be? Round all dollar values to the nearest cent.

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  1. 15 December, 18:57
    0
    correct answer is A on edge

    2020
  2. 15 December, 20:51
    0
    The loan offered by bank W charges the most, $722.25 + $3,902.20 = $4,632.45.

    The loan offered by bank V charges, $822.45 + $3,466 = $4,288.45

    Loan W has $336 more in financial charges.

    Explanation:

    If Kay decides to take the loan form bank V, he will have to pay the initial service charge of $822.45, plus 24 quarterly installments of $1,106.92 each. The total interest charged by the bank will be $3,466

    If he decides to take the loan form bank W, he will have to pay the initial service charge of $722.25, plus 36 quarterly installments of $843.82 each. The total interest charged by the bank will be $3,901.20.
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