1. Calculate the monthly payments for each option given that interest is compounded monthly.
2. What is the total amount that must be paid for each option?
3. What percentage of the total amounts to be paid back to each financial institution is interest?
4. How would you explain to Ramona the differences between these percentages and their corresponding APR's?
5. Based on the financial outcomes for each option, which company would you suggest that you choose to remodel the kitchen?

Option 1 Large Home Improvement Store

Total Cost:$13,200

Financing Terms:Financing through the bank servicing the national home improvement company: 1 year 0% financing with a minimum monthly payment of $100; 16.99% APR for the remaining 3 years

Option 2 Local Small Business Home Improvement Company

Total Cost: $11,800

Financing Terms:Financing through her local credit union: 3% origination fee to be paid first then 7.5% APR for 5 years

Option 3 Online Construction Business

Total Cost: $10,200

Financing Terms:Financing through an online banking service: $1,000 applied toward the project before payback begins then 11.9% APR for 4 years.

Answer rating: 100% (QA)

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