You and your friend are comparing two loan options for a $165,000 house. loan 1 is a 15-year loan with an annual interest rate of 3%. loan 2 is a 30-year loan with an annual interest rate of 4%. your friend claims the total amount repaid over the loan will be less for loan 2. is your friend correct? justify your answer.

No, he is wrong.

Step-by-step explanation:

Since, the total payment of a loan after t years,

Where,

P = present value of the loan,

r = rate per period ,

n = number of periods,

Given,

P = $165,000,

In loan 1 :

r = 3% = 0.03, t = 15 years,

So, the total payment of the loan is,

In loan 2 :

r = 4% = 0.04, t = 30 years,

So, the total payment of the loan is,

Since,

Hence, total amount repaid over the loan will be less for Loan 1.

That is, the friend is wrong.

2nd one in the first row is correct

9

step-by-step explanation: