stephine is taking out a loan in the amount of 15000. her choices for the loan are a 4-year loan at 3% simple interest and a 5 year loan at

Question

stephine is taking out a loan in the amount of 15000. her choices for the loan are a 4-year loan at 3% simple interest and a 5 year loan at 5% simple interest. what is the difference in the amount of interest stephine would have to pay for each of these two loans?​

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Gabriella 2 weeks 2021-09-10T10:48:38+00:00 1 Answer 0

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    2021-09-10T10:50:02+00:00

    Answer:

    $1950

    Step-by-step explanation:

    The equation for simple interest is I = P(rt)

    I is the total interest. We need to find this.

    P is the principal, or the starting value.

    r is the rate in decimal form.

    t is the time, usually in years.

    Use this formula to calculate the interest for Stephine’s two choices.

    4-year loan at 3% simple interest

    Find the decimal form of percentages by dividing the percentage by 100. 3% in decimal form is 0.03. This is “r”.

    “t” is 4 because it’s a four year loan.

    P is 15000.

    Substitute the known variables (P, t, r) then solve to find I.

    I = P(rt)

    I = 15000(0.03)(4)

    I = 15000(0.12)

    I = 1800

    5 year loan at 5% simple interest

    Find the decimal form of percentages by dividing the percentage by 100. 5% in decimal form is 0.05. This is “r”.

    “t” is 5 because it’s a five year loan.

    P is 15000.

    Substitute the known variables (P, t, r) then solve to find I.

    I = P(1+rt)

    I = 15000(0.05)(5)

    I = 15000(0.25)

    I = 3750

    To find the difference in the amount of interest, subtract the smaller value from the greater value.

    Since 3750 is greater than 1800:

    3750 – 1800 = 1950

    The difference in interest is $1950 for the two loans.

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