Out of the following two plans, which one would be cheaper for the Mendozas: The Mendozas wish to borrow $300,000 from a bank to help finance the...

Looking at the options it is easy to estimate which of
them would be cheaper. The first plan requires payments over a longer duration of time
and the interest rate is also higher. There is no doubt here that the second plan will
be cheaper for the Mendozas.

As the question does not ask
for a calculation of the exact difference in the two payments, there is no point in
doing that. Just keep in mind that if the interest rate is higher for the same duration
of time, the interest payment is higher. And for the same interest rate if the duration
of payment is higher the interest paid is also higher.

The
least interest is paid in the case where the interest payment is the least and payments
also have to be made over the least duration of time.