Use the following chart to explain how the loan repayment period affects the total cost of the loan. loan repayment period loan 1 loan 2 principal $5,000 $5,000 interest rate 6.47 percent 6.47 percent monthly payment $98 $57 loan repayment period 5 years 10 years total cost of the loan $5,866 $6,804

The loan repayment period directly affects the total costs of the loan. The longer of a loan period equals a higher cost of loan.

Explanation: In this example, all of the values are the same except the repayment time frame for the loan. By making a smaller payment each month and spreading the payments out over 10 years instead of 5, the costs of borrowing money is $938 more. It is always better to try to pay off loans as quickly as possible because this will decrease the amount of interest that is paid.

due to the changes the federal reserve is making the unused reserves will impact the economy by them facing inflation. inflation is definfed as the increase in pricing of a good or service but the decline of the value of money used for purchasing those items. when the economy has a high inflation rate, they are subject to money loss and hurt on the economy.