Question

Carlos needs to take out a loan for 8350 his choice of a five year loan at 5.3% simple interest in a seven year loan at 5.5 simple interest what will be the difference in the amount of interest charge between two loans

Answer 1

1002

Explanation:

To calculate simple interest formula used is

I= P*R*T/100 where p= principal amount, R=rate of interest, T = Time

case 1:

P=8350

R=5.3

T=5

so interest will be

I = 8350*5.3*5/100=2212.75

Case 2:

P=8350

R=5.5

T=7

so interest will be

I = 8350*5.5*7/100=3214.75

To get the difference of interest subtract interest in case 2 from interest in case 1

Hence difference of interest = 3214.75 - 2212.75 = 1002

Answer 2

We have been given that Carlos needs to take out a loan for 8350 his choice of a five year loan at 5.3% simple interest in a seven year loan at 5.5 simple interest. We are asked to find the difference in the amount of interest charge between two loans.

We will use simple interest formula to solve our given problem.

`I=Prt`, where,

I = Amount of interest,

P = Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

`5.3\%=(5.3)/(100)=0.053`

`I=\$8350\cdot 0.053\cdot 5`

`I=\$2212.75`

Similarly we will find amount of interest for 7 years at 5.5%.

`5.5\%=(5.5)/(100)=0.055`

`I=\$8350\cdot 0.055\cdot 7`

`I=\$3214.75`

Let us find the difference between both amounts.

`\text{Difference in interest charge between two loans}=\$3214.75-\$2212.75`

`\text{Difference in interest charge between two loans}=\$1002`

Therefore, the difference in the amount of interest charge between two loans would be $1002.