THIS USER ASKED 👇

Dahlia is trying to decide which bank she should use for a loan she wants to take out. in either case, the principal of the loan will be $19,450, and dahlia will make monthly payments. bank p offers a nine-year loan with an interest rate of 5.8%, compounded monthly, and assesses a service charge of $925.00. bank q offers a ten-year loan with an interest rate of 5.5%, compounded monthly, and assesses a service charge of $690.85. which loan will have the greater total finance charge, and how much greater will it be? round all dollar values to the nearest cent.

THIS IS THE BEST ANSWER 👇

A is your answer

To solve this, we are going to use the loan payment formula:

place

the payment

the current debt

whether the interest rate is in decimal form

is the number of payments per year

the time for years

Your Bank P.

We know from our problem that the principal of the loan, therefore, is $ 19,450. We also know that Bank P lends nine years with an interest rate of 5.8%, multiplied monthly, so and so. Because Dahlia makes monthly payments, and its 12 months a year,. Let’s replace the values ​​in our formula:

Now we know that Dahlia’s monthly payment is $ 231.59. Knowing that she is going to make 12 monthly payments for 9 years, we can calculate the value of the future loan by multiplying the amount of monthly payments ($ 231.59) by the number of payments monthly (12) by the number of years (9):

Now we know that she is about to pay $ 25,011.72 for her loan. Finally, to calculate the total finance charge, we subtract the original loan ($ 19,450) from the value of the future loan ($ 25,011.72), and then we add the service charge ($ 925.00):

The total financial charge of P bank is $ 6,486.72.

Your Q Bank.

We are going to repeat the same procedure as before.

,,, and. Let’s replace the values ​​in our formula:

Now that we have our monthly payment, we can calculate the value of the future loan by multiplying the amount of monthly payments ($ 211.08) by the number of monthly payments (12) by the number of years (10):

Just as before, to calculate the total finance charge, we are going to subtract the original loan ($ 19,450) from the value of the future loan ($ 25,329.6), and then we are going to add the service charge ($ 690.85) with:

The total financial charge of bank Q is $ 6570.45.

Note that the financial charge on prohibition Q is greater than the financial charge of bank P, so we are going to subtract the financial charge of bank Q from the bank charge of bank P:

We can conclude that the financial charge of Loan Q will be $ 83.73 more than Loan P. Therefore, the correct answer is to

Step by step explanation: