Question

Kyle needs a loan of $3,500 to buy a storage shed. For which loan would he pay the least amount of interest?

a. 12% interest over 2 years
b. 10% interest over 1 year
c. 8% interest over 3 years
d. 15% interest over 6 months

Answer 1

Kyle would pay the least amount of interest on a loan with a 15% interest rate over 6 months (Option d), amounting to $262.50, as it is less than the interest he would pay on the other loan options provided.

Step-by-step explanation:

To figure out for which loan Kyle would pay the least amount of interest, we must calculate the total interest for each option.

• Option a: 12% interest over 2 years would be $3,500 x 0.12 x 2 = $840.
• Option b: 10% interest over 1 year would be $3,500 x 0.10 x 1 = $350.
• Option c: 8% interest over 3 years would be $3,500 x 0.08 x 3 = $840.
• Option d: 15% interest over 6 months (assuming simple interest and annual rate) would be $3,500 x 0.15 x 0.5 = $262.50.

Comparing these amounts, the loan Kyle would pay the least amount of interest on is Option d, 15% interest over 6 months.