Respuesta :
In case of APR 5% total payment made is $12,947.42 and in case of APR 8% total payment made is $14,598.94. Therefore the better deal to choose to pay the less payment is 1st case.
Define APR.
APR is the annual interest produced by a sum that is paid to investors or charged to borrowers is referred to as the annual percentage rate (APR). This does not account for compounding and includes any fees or additional expenditures related to the transaction. Consumers can evaluate lenders, credit cards, or investment goods using the APR as a benchmark figure.
Initial payment is $12,000 with 5% APR and 3 year loan
Monthly payment = P[ i(1+i)ⁿ] / [(1+i)ⁿ-1]
= 12,000[0.05(1+0.05)³]/[1+0.05)³-1]
=$359.65
Over 36 payments total payment is $12,947.42
And in case of 8% APR with a 5 year loan
Monthly payment = 12,000[0.08(1+0/08)⁵] / [(1+0.08)⁵-1]
=$243.31
Over 60 payments total payment is $14,598.94
So, the best deal is 5% APR with a 3 year loan.
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