Roxanne took out a loan at a 6.8% APR, compounded monthly, to buy a kitchen counter, and she is making monthly payments to pay off the loan. Which of these interest rates would have allowed Roxanne to pay off the loan faster?
a.7.2% compounded monthly
b.7.6% compounded monthly
c.6.4% compunded monthly
d. 8.0%

Question

Roxanne took out a loan at a 6.8% APR, compounded monthly, to buy a kitchen counter, and she is making monthly payments to pay off the loan. Which of these interest rates would have allowed Roxanne to pay off the loan faster?
a.7.2% compounded monthly
b.7.6% compounded monthly
c.6.4% compunded monthly
d. 8.0%

anonymous · Answer

I think it is 8.0% because it is the biggest number...

amistre64 · Answer

if the payment stays the same ... then a payment is split into principal and interest.

in order for more money to go to principal, what does interest have to do ... increase or decrease?

anonymous · Answer

...increase?

anonymous · Answer

no wait, decrease

amistre64 · Answer

we have to take from interest to give to principal, so a decrease in interest is required, yes

anonymous · Answer

okay, so it is smaller than6.8%... so 6.4% then?

amistre64 · Answer

yep, id go with 6.4 :)

anonymous · Answer

Thank you very much!