Sam needs to take out a personal loan for $8,900 to pay for a trip to Europe with his classmates. His bank has offered him the four loans listed in the chart below. If all of the loans are compounded monthly, which of the four loans will give Sam the lowest monthly payment? Loan Duration (Months) Interest Rate A 12 9.50% B 24 8.75% C 36 7.75% D 48 6.60%

For a fixed loan amount, the monthly payment depends on both the monthly interest rate and the number of payments. Using the monthly-payment formula for $8,900, the approximate payments are $778 for A, $406 for B, $278 for C, and $209 for D. Loan D has the lowest monthly payment because it spreads repayment over 48 months and has the lowest interest rate, 6.60%.

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