1. You need to borrow $2000 for college expenses. You would like to repay it after 2 years when you expect to be fully employed. You have two options:
   1. You can borrow it from your credit union at an interest rate of 10%. You will pay it back at the end of 2 years -the $2000 plus the finance charge.
   2. Your uncle says he will lend you the money for 9% if you pay the finance charge in advance. At the end of the two years you will pay him back the $2000.
   3. Which loan would you choose?

For each option, compute the finance charges and the APR.

Answer rating: 100% (QA)

To determine which loan option is better we need to calculate the finance charges and the annual per... View the full answer