document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1192942>Question 1192942</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Logan is taking out a loan to buy a $4,000 ring for his girlfriend. He has the two finance options listed below. Which option should be choose? Justify your answer by giving the amount of money Logan will save.\r<BR>\n" );
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document.write( "Option A: A 5 year loan with a 7% interest rate compounded quarterly.\r<BR>\n" );
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document.write( "Option B: An eight year loan with a 5.5% interest rate compounded annually.\r<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #824870 by </B><A HREF=/tutors/aboutme.mpl?userid=Boreal><B>Boreal(15235)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Boreal><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Boreal><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=824870\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> A: 4000=Po (1+(.07/4))^20, since there will be 20 separate times for compounding<BR>\n" );
document.write( "4000=Po*1.414778<BR>\n" );
document.write( "Po=$2827.30, amount of loan<BR>\n" );
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document.write( "B. 4000/(1.055)^8=$2606.39<BR>\n" );
document.write( "The loan in B is smaller by about $220. He will save money on the front end but will be paying interest three years longer. </SPAN>\n" );
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