Question

Mary took out a student loan for $15000 at 4% simple interest. How much interest will she pay in 10 years? suppose she paid it off in 8 years instead of 10 years. how much would she save in interest? :)

Answer 1

Simple interest formula:

Total = principal x (1 + rate x years)

10 years:

Total = 15,000(1+0.04x10)

Total = $21,000

8 years:

Total = 15000(1+0.04x8)

Total = $19,800

Savings = 21,000 - 19,800 = $1,200