Marco and his wife Polly are planning to start their new life as a married couple. They have decided that the first purchase is going to be the land they will build their future home on. The couple has decided to inquire at the Laguna Bel-Air Subdivision, since the subdivision is located in a convenient area near Manila. Marco and Polly have already made the architectural plans for their future home. The architect has recommended that they acquire around 850 square meters.

After consulting with the Laguna Bel-Air Subdivision team, they found that the price point is 19,200 pesos per square meter. They need the extra money, so they have decided to take a loan from the Bank of the Philippine Islands (BPI) to pay for the land they’ve bought.

They’ve decided to loan only 50% of the full amount of the land. They consulted with BPI, and they were presented the following options for their choosing:

Option A: Simple interest scheme, payable in 8 years at a 10% interest rate.
Option B: Compound interest scheme, payable in 5 years at a 5.5% interest rate.