Mr. and Mrs. Johnson wants to borrow $10,000 to renovate their kitchen. Bank ABD offered them a two-year traditional loan with 4.6% interest rate. Bank CFG offered them a two-year fixed payment loan of equal installment of $5,400 per year. Which of the following statements is correct? Group of answer choices a) It is less costly for Mr. and Mrs. Johnson to borrow with the fixed payment loan.   b) There isn't enough information to determine which loan is more costly.   c) It is less costly for Mr. and Mrs. Johnson to borrow with the traditional loan.   d) The two loans are equally costly.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Mr. and Mrs. Johnson wants to borrow $10,000 to renovate their kitchen. Bank ABD offered them a two-year traditional loan with 4.6% interest rate. Bank CFG offered them a two-year fixed payment loan of equal installment of $5,400 per year. Which of the following statements is correct?
Group of answer choices
a) It is less costly for Mr. and Mrs. Johnson to borrow with the fixed payment loan.
 
b) There isn't enough information to determine which loan is more costly.
 
c) It is less costly for Mr. and Mrs. Johnson to borrow with the traditional loan.
 
d) The two loans are equally costly.
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