Final answer:
The difference in interest Rachel will pay on a $1000 loan at 8% interest rate over two and three years is $80, with the interest being $160 and $240 respectively for each period.
Step-by-step explanation:
The question is asking for the difference in interest paid on a loan if it is paid back in two years versus three years, with a given interest rate of 8%. This is a Mathematics problem, typically covered in High School algebra or personal finance classes.
To find the total interest paid over a specific period, we can use the formula for simple interest, which is I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year (in decimal), and T is the time in years.
Let's calculate the interest for two years first:
Interest for two years (I2years) = 1000 * 0.08 * 2
I2years = $160
Next, let's calculate the interest for three years:
Interest for three years (I3years) = 1000 * 0.08 * 3
I3years = $240
Now, we can find the difference:
Difference in interest = I3years - I2years
Difference = $240 - $160 = $80
Therefore, Rachel will pay $80 more if she pays the loan back in three years instead of two.