Analyzing Interest Rates on a Mortgage Colleen and Bill have just purchased a house for $ 650 , 000 , with the seller holding a second mortgage of $ 100 , 000 . They promise to pay the seller $ 100 , 000 plus all accrued interest 5 years from now. The seller offers them three interest options on the second mortgage: a. Simple interest at 6 % per annum. b. 5.5 % interest compounded monthly. c. 5.25 % interest compounded continuously. Which option is best? That is, which results in paying the least interest on the loan?
Analyzing Interest Rates on a Mortgage Colleen and Bill have just purchased a house for $ 650 , 000 , with the seller holding a second mortgage of $ 100 , 000 . They promise to pay the seller $ 100 , 000 plus all accrued interest 5 years from now. The seller offers them three interest options on the second mortgage: a. Simple interest at 6 % per annum. b. 5.5 % interest compounded monthly. c. 5.25 % interest compounded continuously. Which option is best? That is, which results in paying the least interest on the loan?
To find:Analyzing Interest Rates on a Mortgage Colleen and Bill have just purchased a house for , with the seller holding a second mortgage of . They promise to pay the seller plus all accrued interest 5 years from now. The seller offers them three interest options on the second mortgage:
a. Simple interest at per annum.
b. interest compounded monthly.
c. interest compounded continuously.
Which option is best? That is, which results in paying the least interest on the loan?
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