A borrower is offered a loan of $10,000 for three years. She is given a choice on how the interest is to be calculated. Which method of interest calculation would be most beneficial to the borrower?
A) Simple interest
B) Interest compounded annually
C) Interest compounded monthly

Question

Quizplus · Accepted Answer

Simple interest is most beneficial to the borrower because it is calculated on the principal amount only, resulting in lower total interest payments compared to interest that is compounded annually or monthly.

A Borrower Is Offered a Loan of $10,000 for Three