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Answer :
Final answer:
Tim and Sally should request a 60-month loan.
Explanation:
To determine the length of the loan, we need to find a repayment plan that keeps the monthly payments below $250. To do this, we can use the formula for the monthly payment on a loan: PMT = (P * r) / (1 - (1 + r)^(-n)), where PMT is the monthly payment, P is the principal amount, r is the monthly interest rate, and n is the total number of payments. We can rearrange this formula to solve for n: n = -log(1 - (P * r) / PMT) / log(1 + r). Plugging in the values for this loan (P = $9,000, r = 9.5% / 12 = 0.00792, PMT = $250), we find that n ≈ 60.52. Since we are looking for the length of the loan in 12-month increments, the couple should request a 60-month loan (option d).
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