Question

April and May both took out loans to purchase a $25,000 car. April borrowed

$25,000 at 4% simple interest for 5 years. May borrowed $25,000 at 3.75% simple
interest for 6 years. What is the difference in the amount of interest owed?

Answer 1

$625

Explanation:

-This is a simple interest problem of the form:

`I=Prt`

where:

• 
  `I` is the total interest earned in time t
• 
  `P` is the principal amount
• 
  `r` is the simple rate of interest

#The respective interests can then be calculated as follows:

`I_(April)=Prt\\\\=25000* (4)/(100)* 5\\\\=5000\\\\I_(May)=Prt\\\\=25000* (3.75)/(100)* 6\\\\=5625\\\\\\\bigtriangleup I=I_(May)-I_(April)\\\\=5625-5000\\\\=\$625`

Hence, the difference in the amount of interest is $625