Question

Two thousand dollars is borrowed for one year at an interest rate of 1.1% per month.

If the same amount of money can be borrowed at an interest rate
of 13.2% per year, how much could be saved in interest charges?

Answer 1

No money could be saved in interest charges when 2,000 is borrowed either at 1.1% per month for a year or at 13.2% annually, as both interest rates are equivalent.

Step-by-step explanation:

If two thousand dollars is borrowed for one year at an interest rate of 1.1% per month, the total annual interest rate would be 13.2% (1.1% x 12 months).

We can compare this to borrowing the same amount at a flat rate of 13.2% per year. Since the rates are equivalent, there would be no difference in interest charges, meaning nothing is saved in interest by choosing one option over the other.

To answer the original question directly, if 2,000 is borrowed at 1.1% per month for 12 months or at 13.2% per year, no money could be saved in interest charges since both rates amount to the same annually.

Answer 2

There would be no money saved because they are both the same. 1.1% per month is the same as 13.2% per year since 1.1 multiplied to 12 (the number of months in a year) is 13.2. Therefore, no money could be saved either way. Hope this helps!