Question

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.

Answer 1

The correct answer is:

The 13% simple interest rate has a lower cost of credit, which is $504.