Made the same loan as an add-on interest loan

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Reference no: EM131444654

Add-On Interest Loan. Beth has just borrowed $5,200 on a four-year loan at 9 % simple interest. Using the simple interest method, her payments would be $129.40. What if Beth had made the same loan as an add-on interest loan? How would her payments differ? Why is there a difference?

With an add-on interest loan, Beth's payments would be $_?_

If Beth had made the same loan as an? add-on interest? loan, the payments would differ by $17.93—the difference between the? add-on interest payment of ?$147.33 and the simple interest payment of ?$129.40. Even though the same interest rate is used for both? methods, the? add-on method is more costly because the interest payment is not reduced over time as Beth pays off the? loan, while the interest component of the monthly? payment: ??

A. decreases using the simple interest method.

B. remains constant using the simple interest method.

C. increases using the simple interest method.

Reference no: EM131444654

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