Answer:
Option B is correct.
Step-by-step explanation:
we are given that:
Principal Amount for loan, P = $ 205,000
Rate for 25-year loan , R = 3.2 % compounded monthly
Time, T = 25 years.
Total Amount of interest paid for 25-year loan = $ 93,077
Rate for 20-year loan, R = 3.2% compounded monthly
Time, T = 20 years.
Monthly installments in 20-year loan is more than 25-year loan.
There is 5-year gap in time period of both loan.
Interest is compounded monthly means in 25-year loan Ian will pay for 60 monthly installment more than 20-year loan.
So, this implies that Total interest amount for 20-year loan will be less than total interest amount for 25-year loan instead of higher monthly installments.
Therefore, Option B is correct.
