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While shopping for a car loan, you get the following offers: Solid Savings & Loan is...

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Question

Basic Math

While shopping for a car loan, you get the following offers:Solid Savings & Loan is willing to loan you $10,000 at 5%interest for 4 years. Fifth Federal Bank & Trust will loan youthe $10,000 at 3% interest for 3 years. Both require monthlypayments. You can afford to pay $250 per month. Which loan, ifeither, can you take?
Solid Savings & Loan
Fifth Federal Bank & Trust   
neither loan

Answer & Explanation Solved by verified expert
4.4 Ratings (691 Votes)
We can afford to pay 250 per month So we have to compute themonthly payments for both loans Then we can decide which loan wecan takeWhen we take a loan and then pay it back with interest by makingfixed periodic payments over some numbers of years the loan is anannuity from lenders point of viewAn annuity is an    See Answer
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