Two customers took out home equity loans. • Cathy took out a 10-year loan for $20,000 and paid 5.20% annual simple interest • Steven took out a 15-year loan for $20,000 and paid 4.80% annual simple interest What is the difference between the amounts of interest Cathy and Steven paid for their loans? A) $3,000 B) $4,000 C) $5,000 D) $6,000

Question

Mathematics

Bruiser

12 December, 02:16

Two customers took out home equity loans. • Cathy took out a 10-year loan for $20,000 and paid 5.20% annual simple interest • Steven took out a 15-year loan for $20,000 and paid 4.80% annual simple interest What is the difference between the amounts of interest Cathy and Steven paid for their loans? A) $3,000 B) $4,000 C) $5,000 D) $6,000

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Answers (2)

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Shiloh · Answer 1

the answer is B $4,000

Step-by-step explanation: Apply the formula I = Prt, where I is interest, P is principle, r is rate, and t is time.

I = 20,000 (

5.2

100

) (10) = 20,000 (0.052) (10) = 10,400

I = 20,000 (

4.8

100

) (15) = 20,000 (0.048) (15) = 14,400

Therefore, 14,400 - 10,400 = 4,000

Smarty · Answer 2

Answer: B) $4,000

Step-by-step explanation:

The formula for determining simple interest is expressed as

I = PRT/100

Where

I represents interest paid on the loan.

P represents the principal or amount taken as loan

R represents interest rate

T represents the duration of the loan in years.

Considering Cathy's loan,

P = $20,000

R = 5.2%

T = 10 years

I = (20000 * 5.2 * 10) / 100

I = $10400

Considering Steven's loan,

P = $20,000

R = 4.8%

T = 15 years

I = (20000 * 4.8 * 15) / 100

I = $14400

The difference between the amounts of interest Cathy and Steven paid for their loans is

14400 - 10400 = $4000