Angel wants to take out a loan of $9,000 with interest that compounds monthly. Use the formula A = P(1 + nt to find

which of these loan terms will have the lowest total cost.

A) 2 years at 7% interest

B) 3 years at 6% interest

C) 4 years at 5% interest

D) 5 years at 4% interest

A) 2 years at 7% interest

Step-by-step explanation:

You have to use the formula to calculate the amount after a certain period of time with compound interest and that formula would be (The formula in the statement appears to be incomplete as it doesn't have the interest rate):

A=P(1+r/n)^nt, where

A= amount after time has passed

P= Principal

r= Rate expressed as a decimal

n= Number of times in a year that interest is compounded

t= Time in years

A) 2 years at 7% interest

A=$9,000*(1+0.07/12)^12*2

A=$9,000*1.1498

A=$10,348.2

B) 3 years at 6% interest

A=$9,000*(1+0.06/12)^12*3

A=$9,000*1.19668

A=$10,770.12

C) 4 years at 5% interest

A=$9,000*(1+0.05/12)^12*4

A=$9,000*1.22

A= $10,980

D) 5 years at 4% interest

A=$9,000*(1+0.04/12)^12*5

A=$9,000*1.2209

A=10,988.96

According to this, the loan term that will have the lowest cost is: A) 2 years at 7% interest because it is the one in which Angel would pay less.

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