Question: Question 2 (14 marks) Peter is considering applying for a personal loan with an amount of $100,000. Lender A is offering him an installment loan

Question 2 (14 marks) Peter is considering applying for a personal loan with an amount of $100,000. Lender A is offering him an installment loan with an annual percentage rate of 10%. The loan will be repaid in three years with 3 equal annual repayments with the first repayment is made one year from today. Lender A uses the add-on method to calculate the interest. Lender B is offering him an installment loan with an annual percentage rate of 10%. The loan will be repaid in three years with 3 equal annual repayments with the first repayment is made one year from today. Lender B uses the simple interest method to calculate the interest. (a) Calculate the difference between the total finance charge of the loan offered by Lender A and B to determine which loan is cheaper. (6 marks) (b) Explain why the loan offered by Lender B is cheaper? (4 marks) (c) What would be the interest and principal portion in the first repayment of Lender Bs Loan? (4 marks)

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