aisha needs a loan to finance her latest startup. she wants a loan with the lowest overall interest costs…

aisha needs a loan to finance her latest startup. she wants a loan with the lowest overall interest costs. shes considering a 3 - year loan with an 8% fixed interest rate or a 5 - year loan with a 6% fixed interest rate. why would aisha pick the 3 - year loan? select a response. it has a lower total cost. it has a smaller monthly payment. it has a lower interest rate. it has a higher loan amount.

aisha needs a loan to finance her latest startup. she wants a loan with the lowest overall interest costs. shes considering a 3 - year loan with an 8% fixed interest rate or a 5 - year loan with a 6% fixed interest rate. why would aisha pick the 3 - year loan? select a response. it has a lower total cost. it has a smaller monthly payment. it has a lower interest rate. it has a higher loan amount.

Answer

Answer:

It has a lower total cost.

Explanation:

Step1: Analyze interest - time relationship

Interest = Principal × Rate × Time.

Step2: Compare two loan options

For the 3 - year loan at 8% and 5 - year loan at 6%, assume the principal is $P$. The interest of the 3 - year loan $I_1=P\times0.08\times3 = 0.24P$. The interest of the 5 - year loan $I_2=P\times0.06\times5=0.3P$. Since $I_1 < I_2$, the 3 - year loan has a lower total cost (principal + interest). So Alisha would pick it for the lower overall interest cost.