a person repays a five - year bank loan that allows prepayment without penalty, in three years. as a result…

a person repays a five - year bank loan that allows prepayment without penalty, in three years. as a result, the person\n○ earns a higher interest rate on an existing savings account for the next two years.\n○ saves two years of interest charges.\n○ is guaranteed to receive a larger loan in the future.\n○ is guaranteed a lower interest rate on personal loans in the future.

a person repays a five - year bank loan that allows prepayment without penalty, in three years. as a result, the person\n○ earns a higher interest rate on an existing savings account for the next two years.\n○ saves two years of interest charges.\n○ is guaranteed to receive a larger loan in the future.\n○ is guaranteed a lower interest rate on personal loans in the future.

Answer

Answer:

saves two years of interest charges.

Explanation:

Step1: Analyze loan prepayment

A five - year loan is paid in three years.

Step2: Consider interest implications

Interest is charged over the life of the loan. By paying it off early, two years of interest charges are saved.

Step3: Evaluate other options

There is no connection between early loan repayment and higher savings rate, larger future loan, or lower future personal loan rate.