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The monthly payment under each option will be $607.47 and $332.76.
What is a monthly payment?
Monthly Deposit refers to a residential loan's limits, in production principle and interest earned.
We know that the monthly payment is given as
MP = Pr[(1 + r)ⁿ / {(1 + r)ⁿ - 1}]
Where MP is the monthly payment, P is the initial amount, r is the rate of interest, and n is the number of years.
Raquel is presented with two loan options for a $60,000 student loan.
Then the monthly payment under each option will be
Option A is a 10-year fixed rate loan at 4% interest compounded monthly.
P = $60,000
r = 0.04 / 12 = 0.00333
n = 12 × 10 = 120
MP will be
MP = 60000 x 0.00333 x [(1.0033)¹²⁰ / {(1.0033)¹²⁰ - 1}]
MP = $607.47
And total interest will be
⇒ 607.47 x 120 - 60000
⇒ $12,896.4
Option B is a 20-year fixed rate loan at 3% interest compounded monthly.
P = $60,000
r = 0.03 / 12 = 0.0025
n = 12 × 20 = 240
MP will be
MP = 60000 x 0.0025 x [(1.0025)²⁴⁰ / {(1.0025)¹⁴⁰ - 1}]
MP = $332.76
And total interest will be
⇒ 322.76 x 240 - 60000
⇒ $19,862.4
More about the monthly payment link is given below.
https://brainly.com/question/14064255
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