Question

Valerie takes out a loan of £2800. Shannon takes out a loan of £4600. Ruby takes out a loan of £5400.

All three pay 7% simple interest each year for six years.
a Calculate how much interest Valerie has to pay altogether.
b Calculate how much more interest Ruby has to pay altogether than Shannon.

Answer 1

Valerie has to pay £1176 in interest for her loan. Ruby has to pay £344 more in interest than Shannon after calculating their respective interests using the simple interest formula.

Step-by-step explanation:

To calculate simple interest, we use the formula I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years.

(a) For Valerie, the interest can be calculated as:

• P = £2800
• R = 7%
• T = 6 years

Using the formula:

I = PRT = £2800 * 0.07 * 6 = £1176

Valerie has to pay £1176 in interest altogether.

(b) For Ruby and Shannon, first, calculate Ruby's interest:

• P = £5400
• I = PRT = £5400 * 0.07 * 6 = £2268

Then calculate Shannon's interest:

• P = £4600
• I = PRT = £4600 * 0.07 * 6 = £1924

The difference in interest paid by Ruby compared to Shannon is:

£2268 - £1924 = £344

Ruby pays £344 more in interest than Shannon.