Understanding Credit Quick Check
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Question
Compare a simple interest rate of 11% and a simple interest rate of 13% for a $400 credit card loan that can be paid in full at the end of a fixed loan length of 2 years.
Determine which interest rate has a lower cost of credit. Find the cost of credit.
(1 point)
Responses
The 13% simple interest rate has the lower cost of credit, which is $504.
The 13% simple interest rate has the lower cost of credit, which is $504.
The 11% simple interest rate has a lower cost of credit, which is $488.
The 11% simple interest rate has a lower cost of credit, which is $488.
The 11% simple interest rate has a lower cost of credit, which is $88.
The 11% simple interest rate has a lower cost of credit, which is $88.
The 13% simple interest rate has a lower cost of credit, which is $104.
The correct answer is:
The 13% simple interest rate has a lower cost of credit, which is $504.