Question

If Glacier Construction Company can pay off its loan in 20 months at 11% rather than 32 months at 10%, how much money will the company save on a loan of $30,000$3,800$4,000$4,200$4,400None of these choices are correct.

Answer 1

The total interest paid can be calculated by:

`P* r* t`

Where P is the principal, r is the interest rate and t is the time in years.

For the first loan we have:

`30000*0.11*(20)/(12)=5500`

For the second loan we have:

`30000*0.1*(32)/(12)=8000`

Therefore the amount save is:

`8000-5500=2500`

Therefore none of the choices are correct.