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A customer will borrow $12,000 to buy a car. Which loan option would allow
the customer to pay the least amount of interest?
A 4-year loan with a 5.2% annual simple interest rate
A 5-year loan with a 4.2% annual simple interest rate
A 6-year loan with a 4.7% annual simple interest rate
O
A 3-year loan with an 8.4% annual simple interest rate

Sagot :

Christykvanceidn

Answer:

number one is the best one

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The loan option that will allow the customer to pay the least amount of interest is 4-year loan with a 5.2% annual simple interest rate.

Calculation of loan with least simple interest rate

Formula for simple interest = P ×T × R/100

P = Principal amount borrowed ($12,000)

T = Time in various years given

R = Rate of simple interest generated

To determine which loan option that would allow the customer to pay the least amount of interest, the simple interest of each option is calculated below

Simple interest of a 4 years loan = 12000×4×5.2/100

= $2,496

Simple interest of a 5 years loan= 12000×5×4.2/100

= $2,520

Simple interest of a 6 years loan= 12000×6×4.7/100

= $3,384

Simple interest of a 5 years loan= 12000×3×8.4/100

= $ 18,144

Therefore, the loan option that will allow the customer to pay the least amount of interest is 4-year loan with a 5.2% annual simple interest rate.

Learn more about simple interest here:

https://brainly.com/question/20690803

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