Question

Two customers took out loans from a bank.



• Jacob took out a 3-year loan for $8,000 and paid 4.2% annual simple interest.

• Christian took out a 5-year loan for $8,000 and paid 3.9% annual simple interest.



What is the difference between the amounts of interest Jacob and Christian paid for their loans?


$1,560.00


$635.59


$552.00


$1008.00

Answer 1

First, calculate the amount of interest Jacob paid:

Interest = Principal x Rate x Time
Interest = $8,000 x 0.042 x 3
Interest = $8,000 x 0.126
Interest = $1,008.00

Next, calculate the amount of interest Christian paid:

Interest = Principal x Rate x Time
Interest = $8,000 x 0.039 x 5
Interest = $8,000 x 0.195
Interest = $1,560.00

The difference between the amounts of interest Jacob and Christian paid for their loans is:

$1,560.00 (Christian's interest) - $1,008.00 (Jacob's interest) = $552.00

Therefore, the difference between the amounts of interest Jacob and Christian paid for their loans is $552.00.