Tammy is taking out an amortized loan for $91,000 to open a small business and is deciding between the offers from two lenders. she wants to know which one would be the better deal over the life of the small business loan, and by how much. answer each part. do not round intermediate computations, and round your answers to the nearest cent. if necessary, refer to the list of financial formulas. (a) an online lending company has offered her a 8-year small business loan at an annual interest rate of 13.4%. find the monthly payment. txo ? (b) a bank has offered her a 10-year small business loan at an annual interest rate of 10.7%. find the monthly payment. (c) suppose tammy pays the monthly payment each month for the full term. which lender's small business loan would have the lowest total amount to pay off, and by how much? online lending company the total amount paid would be $ less than to the bank. o bank the total amount paid would be less than to the online lending company.

  (a) $1549.89

  (b) $1238.12

  (c) The bank total payoff is less expensive by $215.05

Step-by-step explanation:

An appropriate formula for finding the monthly payment A on a loan of principal value P at annual interest rate r for t years is ...

  A = P(r/12)/(1 -(1+r/12)^(-12t))

(a) For P=91,000, r = 13.4%, t = 8 years, the monthly payment is ...

  A = $91,000(.134/12)/(1 -(1+.134/12)^(-96)) ≈ $1549.89

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(b) For the same P and r = 10.7%, t = 10, the monthly payment is ...

  A = $91,000(.107/12)/(1 -(1+.107/12)^-120) ≈ $1238.12

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(c) The total repayment cost of the first loan is ...

  $1549.89 × 96 = $148,789.66 . . . . using unrounded values

The total repayment cost of the second loan is ...

  $1238.12 × 120 = $148,574.61 . . . . using unrounded values

Then the difference is ...

  $148,789.66 -148,574.61 = $215.05 . . . . in favor of the bank loan

The total amount paid to the bank would be $215.05 less than to the on-line lending company.

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