SOLUTION: Kara wants to remodel her kitchen. She budgets $25,000 for the job. Her bank is offering her the loan at a rate of 12.6%/a compounded monthly. She has the freedom to choose between

Algebra ->  Finance -> SOLUTION: Kara wants to remodel her kitchen. She budgets $25,000 for the job. Her bank is offering her the loan at a rate of 12.6%/a compounded monthly. She has the freedom to choose between      Log On


   

Question 1202557: Kara wants to remodel her kitchen. She budgets $25,000 for the job. Her bank is offering her the loan at a rate of 12.6%/a compounded monthly. She has the freedom to choose between paying it off over a 5, 7, or 10 year term.
a) Determine the monthly payment for each term.
b) Calculate how much interest Kara would pay for each term.
c) Which term should Kara choose? Why might she choose a different term?


Answer by mananth(16946) About Me  (Show Source):
You can put this solution on YOUR website!
Loan amount $ 25000
years 5 60 months
Interest rate = 12.6 % 0.126/12=0.0105

P=+%28Xo+%2Ar%29%2F%281-%281%2Br%29%5E%28-n%29%29%29

%2825000%2A0.0105%29%2F%281-%281.0105%29%5E-60%29
P=$563.72
Similarly you can calculate for 6 and 7 years and draw your conclusions