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Linda has $10,000 in credit card balances and is being charged 17% compound interest. When Linda goes to the bank to apply for a home mortgage at 3% compound interest, the loan officer offers her an additional $10,000 more than what she needs to purchase the home. What would you tell Linda?
Frank is considering a loan from Main Street Bank in the amount of $10,000 for 3 years at a simple interest rate of 5%. He also has an option for a loan from Second Street Bank in the amount of $15,000 for 4 years at 3% simple interest. Neither loan requires any monthly payments; instead, the loan is to be paid in a lump sum at the end of the term. Frank is asking you to help him figure out how much interest he will pay on these loans.
Betty is applying for a personal loan at Walnut Street Bank to pay for an upcoming wedding. She will need $5,000 for 120 days, and the bank agrees to let her pay the loan back in a lump sum. The simple interest rate will be 6.5%. How much interest will Betty pay?
George is planning to purchase new furniture for his living room and plans to spend $7,500. What would you recommend to George as the best loan option?
Rebecca goes to Acme Credit Union for a loan. She needs to borrow $25,000, and the loan officer offers a loan at 4% compound interest for four years if she agrees to pay the loan in a lump sum at the end of 4 years. What would you tell her is the interest she will pay?