Question

1. Wanda took out a personal loan for $16,000 at 9% simple interest. a. How much interest will she pay after 5 years? b. Suppose she pays off the loan in 3 years instead of 5 years. How much money will she save in interest? Answer:

Answer 1

After 5 years she will pay $7,200 in interest.
After 3 years she will pay $4,320 in interest.
Interest saved is 7,200-4,320 = $2880

A= P(1+rt)
where A is the total amount accrued, principal plus interest.
r is the interest rate
P is the amount invested or owed.
and t is the time period.

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