Question

Question 5 An Investor is about to take a loan of $ 10.000 from a bank to finance her project. She has two choices to repay the loan Option 1. Single payment at the end of year 7 with 12.5 % simple interest per year Option 2: Single payment at the end of year 7 with 8.5% annually compound interest Assist the investor to decide on which option she should choose? Match the closest correct answers for the below questions: The amount she has to repay if she choose Option 1 = A $17,701 The amount she has to repay if she choose Option 2 = B. $17.900 The better choice to repay her loan is? c. Option 2 D. Option 1 E. $18,000 F. $18,750 A Moving to another question will save this response.

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Answer 1

Answer )
1. By aphum I, S. 1 > 1 Px RXT » loo Perancipal where, l- R P- Robe Tinne s I » 10,000_x 12.5 x 7 104 S .I z 8750 tros to 10,000 78750 18750 grament freya) ② By option2 C-I 22 Arnant - Principal Amount of P(1+r)" 7 10,000 7 1+ 8.5 Tool 10,000 (1.085) ? 10,000 (1.7701 17,70

ن CI on and 1770i 10,000 oftenen ? 2) 7701 :. and option is better to repay the loan Sine interest on and fun is less than first option.

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