Question

act Question 7 0/10 pts Assume you need to borrow $10,000 over a ten-year period to renovate the kitchen in your house. Which of the following borrowing terms would be most beneficial to you? 119 simple interest for the entire period. T 7.56 interest compounded annually for the first five years and then 10 years simple interest for the remaining five 1036 Simple interest for the first five years and then 7.535 annually compounded interest for the remaining five years • 8.0% interest compounded annually for the entire period.

Answer 1

Option 4 Is best i.e. 8% compounded annually for the entire period as highest value after 10 Years	21,589.25
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Please find below the answer
Statement showing Computations
Particulars	Amount
Option 1)
Simple Interest per year =10,000*11%	1,100.00
Amount after 10 years = 10,000 + 1100*10	21,000.00
Option 2
Amount after 5 years = 10,000(1.075)^5	14,356.29
Simple Interest per year = 14,356.29*10%	1,435.63
Amount after 10 years = 14,356.29 + 1435.63*5	21,534.44
Option 3
Simple Interest per year =10,000*10%	1,000.00
Amount after 5 years	15,000.00
Amount after 10 Years = 15000(1.075)^5	21,534.44
Option 4
Amount after 10 years = 10,000(1.08)^10	21,589.25