Fabian is taking out a loan in the amount of $10,000. His choices for the loan are a 4-year loan at 4% simple interest and a 6-year loan at 5% simple interest. What is the difference in the amount of interest Fabian would have to pay for each of these two loans?

Question

Mathematics

Omar Miranda

7 October, 12:25

Fabian is taking out a loan in the amount of $10,000. His choices for the loan are a 4-year loan at 4% simple interest and a 6-year loan at 5% simple interest. What is the difference in the amount of interest Fabian would have to pay for each of these two loans?

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Answers (1)

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Serenity · Answer 1

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 the first choice,

P = $10000

R = 4%

T = 4 years

I = (10000 * 4 * 4) / 100 = $1600

Considering the second choice,

P = $10000

R = 5%

T = 6 years

I = (10000 * 5 * 6) / 100 = $3000

the difference in the amount of interest that Fabian would have to pay for each of these two loans is

3000 - 1600

= $1400