Darnell is comparing three loan options to determine which one is best for his situation. Match each loan option with the correct description.

Loan Option Principal Amount Monthly Payment Loan Term
option R $14,000 $203.67 72 months
option S $15,000 $256.24 60 months
option T $16,000 $334.43 48 months
option R
option S
option T
This loan option has the lowest finance charge.
arrowRight
This loan option has the highest finance charge.
arrowRight
This loan option has neither the highest finance
charge nor the lowest monthly payment.
arrowRight

The amount of the finance charge is the difference between the amount paid back and the amount borrowed. The amount paid is the product of the monthly payment and the number of months.

Finance Charge

For monthly payment m, paid over t months, the finance charge is ...

charge = mt -P . . . . where P is the principal borrowed.

For the various loans, the finance charges are ...

option R: (203.67)(72) -14000 = 664.24

option S: (256.24)(60) -15000 = 374.40

option T: (334.43)(48) -16000 = 52.64

Lowest charge: T

Highest charge: R

Neither lowest nor highest: S