2) Jennifer is considering taking out a loan with a principal of

$16,200 from one of two banks. Bank F charges an interest

rate of 5.7%, compounded monthly, and requires that the

loan be paid off in eight years. Bank G charges an interest

rate of 6.2%, compounded monthly, and requires that the

loan be paid off in seven years. How would you

recommend that Jennifer choose her loan?

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

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

Where

A = total value of the loan at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount borrowed

Considering Bank F's offer,

From the information given,

P = $16200

r = 5.7% = 5.7/100 = 0.057

n = 12 because it was compounded 12 times in a year.

t = 8 years

Therefore,

A = 16200 (1 + 0.057/12) ^12 * 8

A = 16200 (1.00475) ^96

A = $25531.2

Considering Bank G's offer,

From the information given,

P = $16200

r = 6.2% = 6.2/100 = 0.062

n = 12 because it was compounded 12 times in a year.

t = 7 years

Therefore,

A = 16200 (1 + 0.062/12) ^12 * 7

A = 16200 (1.00517) ^84

A = $24980.4

Bank G's offer is better because she would pay a lower amount of interest in total