A plan which would give Genesis the lowest monthly payment is: C. The monthly payment on a bank loan would be $317.50, which is lower than the monthly credit card payment.
In order to determine the plan which would give Genesis the lowest monthly payment, we would calculate the simple interest earned over each of the time period.
Mathematically, the simple interest earned can be calculated by using this formula:
A = P(1 + rt)
Where:
Substituting the given parameters into the formula, we have;
A = 9000[1 + (0.09 × 3)]
A = 9000[1 + 0.27]
A = 9000 × 1.27
Future value, A = $11,430.
Next, we would calculate the monthly payment over a period of 36 months as follows:
Monthly payment = Future value/Time
Monthly payment = 11,430/36
Monthly payment = $317.50.
Similarly, we would calculate the compound interest earned on the credit card by using this formula:
[tex]A=P(1+\frac{r}{n} )^{nt}[/tex]
A = 9000[1 + (0.18/12)]⁽¹² ˣ ⁷⁾
A = 9000[1 + 0.015]⁸⁴
A = 9000 × 1.015⁸⁴
A = 9000 × 3.49258954
Future value, A = $31,433.31.
Next, we would calculate the monthly payment over a period of 84 months as follows:
Monthly payment = Future value/Time
Monthly payment = 31,433.31/84
Monthly payment = $372.21.
In this context, we can reasonably infer and logically deduce that the plan which would give Genesis the lowest monthly payment is the monthly payment on a bank loan.
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