Tiago Has a $3,000 Student Loan Principal with an Annual

Tiago has a $3,000 student loan principal with an annual interest rate of 6 percent. Tiago has just received an annual bonus from his workplace of $1,500 and is trying to decide what to do with the money. He could put the money toward paying down his student loan balance, or he could open a savings account with an annual interest rate of 2 percent. Assume that there will be no additional opportunities during the year for Tiago to put money toward his student loans or into a savings account. If he is acting rationally, what action should Tiago take?

A) Open a savings account, because it's always wise to have money set aside for an emergency.
B) Open a savings account, because he'll earn $30 in interest.
C) Put the money toward his student loans, because he can't be certain whether he'll receive another bonus next year.
D) Put the money toward his student loans, because he'll avoid owing $90 in interest.