QuestionMay 30, 2025

Which will cost you the most to pay back in full in the long run? 10,000 in student loans paid back at 6% compounding interest after 10 years. A 12,000 car loan paid back at 8% compounding interest after 4 years. An 8,000 credit card bill paid back at 20% compounding interest after 6 years. They will all cost the same.

Which will cost you the most to pay back in full in the long run? 10,000 in student loans paid back at 6% compounding interest after 10 years. A 12,000 car loan paid back at 8% compounding interest after 4 years. An 8,000 credit card bill paid back at 20% compounding interest after 6 years. They will all cost the same.
Which will cost you the most to pay back in full in the long run?
 10,000 in student loans paid back at 6%  compounding interest after 10 years.
A 12,000 car loan paid back at 8%  compounding interest after 4 years.
An 8,000 credit card bill paid back at 20%  compounding interest after 6 years.
They will all cost the same.

Solution
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Answer

The credit card bill will cost the most to pay back in full in the long run, with a future value of \23,887.87. Explanation 1. Calculate Future Value of Student Loan Use **FV = PV(1 + r)^n** where PV = 10000, r = 0.06, n = 10. FV = 10000(1 + 0.06)^{10} = 10000 \times 1.790847 = 17908.47 2. Calculate Future Value of Car Loan Use **FV = PV(1 + r)^n** where PV = 12000, r = 0.08, n = 4. FV = 12000(1 + 0.08)^{4} = 12000 \times 1.36049 = 16325.88 3. Calculate Future Value of Credit Card Bill Use **FV = PV(1 + r)^n** where PV = 8000, r = 0.20, n = 6. FV = 8000(1 + 0.20)^{6} = 8000 \times 2.985984 = 23887.87

Explanation

1. Calculate Future Value of Student Loan<br /> Use **$FV = PV(1 + r)^n$** where $PV = 10000$, $r = 0.06$, $n = 10$. <br /> $FV = 10000(1 + 0.06)^{10} = 10000 \times 1.790847 = 17908.47$<br /><br />2. Calculate Future Value of Car Loan<br /> Use **$FV = PV(1 + r)^n$** where $PV = 12000$, $r = 0.08$, $n = 4$. <br /> $FV = 12000(1 + 0.08)^{4} = 12000 \times 1.36049 = 16325.88$<br /><br />3. Calculate Future Value of Credit Card Bill<br /> Use **$FV = PV(1 + r)^n$** where $PV = 8000$, $r = 0.20$, $n = 6$. <br /> $FV = 8000(1 + 0.20)^{6} = 8000 \times 2.985984 = 23887.87$
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