Emma is taking out a loan in the amount of $25,000. Her choices for the loan are a 60-month loan at 5% annual simple interest and a 72-month loan at 6% annual simple interest. What is the difference in the amount of interest Emma would have to pay for these two loans?

Question

Mathematics

Smirk

23 December, 04:31

Emma is taking out a loan in the amount of $25,000. Her choices for the loan are a 60-month loan at 5% annual simple interest and a 72-month loan at 6% annual simple interest. What is the difference in the amount of interest Emma would have to pay for these two loans?

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Answers (1)

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Rudy · Answer 1

The answer is $2,750

Step-by-step explanation:

Apply the formula I = Prt, where I is interest, P is principle, r is rate, and t is time.

I = 25,000 (5/100) (60/12) = 25,000 (0.05) (5) = 6,250

I = 25,000 (6/100) (72/12) = 25,000 (0.06) (6) = 9,000

Therefore, 9,000 - 6,250 = 2,750