question 6 of 8\naisha needs a loan to finance her latest startup. she wants a loan with the lowest overall…

question 6 of 8\naisha 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?\nselect a response.\nit has a lower total cost.\nit has a smaller monthly payment.\nit has a lower interest rate.\nit has a higher loan amount.

question 6 of 8\naisha 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?\nselect a response.\nit has a lower total cost.\nit has a smaller monthly payment.\nit has a lower interest rate.\nit has a higher loan amount.

Answer

Brief Explanations:

The 3 - year loan has an 8% interest rate and the 5 - year loan has a 6% interest rate. But the total interest cost is calculated as principal × interest rate × time. For a given principal, the total interest cost for the 3 - year loan is principal×0.08×3 = 0.24×principal, and for the 5 - year loan is principal×0.06×5=0.3×principal. So the 3 - year loan has a lower total cost.

Answer:

It has a lower total cost.