Deming asked his older brother, Boqin for a loan of $25,000 over 5 years so he could buy a car. Deming thought he could get a loan at a good "brotherly" rate but was surprised when his older brother refused to give him a simple interest rate loan at 7%. Instead, Boquin offered a loan at 7% compounded monthly with a lump sum payment in 5 years. What is the difference between compounding interest over simple interest in the two loans?

Select one:

a.

$1,300.75

b.

$1,005.68

c.

There is no difference.

d.

$1,310.23

e.

$1,690.63