A store is offering 2 fixed installment loan options for purchases over $3000.00:

Option 1: 20% down payment and financing at 6% simple interest per year for 3 years.

Option 2: no down payment and financing at 6.35% simple interest for 4 years.

If your purchase amounts to $4400.00 -

a. Which option will result in smaller total finance charge? What will that total finance charge be?

b. Which option will result in the smaller monthly payment? What will that monthly payment be?