Homework: Chapter 9 Homework Score: 0 of 1 pt P9-18 (similar to) Score: 43.64%,

Question

Homework: Chapter 9 Homework Score: 0 of 1 pt P9-18 (similar to) Score: 43.64%, 4.8 of 1 1 p average cost ef c Person" Finance Problem John Dough has just been awarded his degree in business He has three education oans outstanding They all mature in 5 years and can be repaid ine before maturty. The amounts oned on each loan and the anal interest rate associated with each loan are given in the following table: m John can also combine the total of his three debts (that is, $64,000) and create a consolidated loan leave the tree indvidual loans as is) or creale a consolidated loan (the $64,000 question) from his bank. His bank wi John do nothing (Round to two decimal places) Data Table Click on the icon located on the top-right comer of the data table below in order bo Loan Balance due $24.000 $10,000 96% 56% Print Done

Explanation / Answer

Loan Amount Weight Annual Interest rate Weight*Interest          24,000 37.500% 6.60% 2.47500%          10,000 15.625% 9.60% 1.50000%          30,000 46.875% 5.60% 2.62500%          64,000 Total 6.60000% As we can see that the weighted Interest rate currently being paid is 6.6% Since bank has offered consolidated loan @ 5.6%, it is advisible to John to accept the bank proposal

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