Kimberly needs a laptop for her schoolwork now while in high school, and plans to keep it through college. She does not have the cash upfront so she has decided to take out a 9 month installment loan.
Best Buy is selling the computer she wants for $2500. She can get a loan at 8.5% now and pay it back in 9 months.
Office Max has the same computer for $2399, for which she can get a loan at 9%.
Use bankrate.com amortization calculator (http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx) to view the amortization schedule for each loan. Remember that the term of the loan is 9 months. She will not make a down payment and will be borrowing the full purchase price of the computer.
1) Use bankrate.com to find the monthly payment for each.
2) Calculate the total amount of interest paid for each, once she has paid back the loan.
3) Where should she get her laptop from and why?