Question

Parva is excited about buying her first home. She needs a loan of $100,000, and visits four different banks to see what kind of interest rate she can get. Parva makes a chart of the interest rate each bank offers.

A 2-column table with 4 rows. Column 1 is labeled bank name with entries First Bank, Cactus Bank, Tall Mountain Bank, Water Road Bank. Column 2 is labeled Interest rate (percent) with entries 5, 3, 4.5, 3.7.

Which bank do you think Parva should use for her loan?

First Bank
Cactus Bank
Tall Mountain Bank
Water Road Bank

Answer 1

Cactus Bank — it offers the lowest interest rate (3%). On a $100,000 loan that’s $3,000 in interest per year (vs $5,000 at 5%, $4,500 at 4.5%, $3,700 at 3.7%).