Peter wants to borrow $3,000. He has two payment plans to choose from. Plan A is 4% interest over 6 years. Plan B is 5% interest over 4 years. Using the formula m=p+prt/12t for payment, m, which statement best compares the plans?

Question

anonymous · Answer

Plan A has a monthly payment of about $23 less and a total interest charge of $120 less than plan B.
Plan A has a monthly payment of about $23 less and a total interest charge of $120 more than plan B.  
Plan A has a monthly payment of about $23 more and a total interest charge of $120 more than plan B.
Plan A has a monthly payment of about $23 more and a total interest charge of $120 less than plan B.

phi · Answer

They want you to figure out the monthly payment and the total interest paid for both loans.

anonymous · Answer

okay

phi · Answer

for plan A the interest is  P*r*t
where P is 3000, r is 0.04 and t is 6
in other words, the total interest for plan A is 3000*6*0.04

anonymous · Answer

Okay, so its 720?

phi · Answer

yes, now do  the same for plan B