Question

Mr. Stripling needs to take out a loan of $20,000 to be able to pay for his Graduate courses. He can borrow from two different banks. The first bank is Union Hill Bank, which offers him 7% interest for 3 years. The other bank is called Emerson Bank, which offers him 5% interest for 4 years. Which bank should Mr. Stripling borrow the money from to complete his Graduate courses? Justify your answer.

Answer 1

it is best for Mr. Stripling to borrow money from Bank B ( Emerson Bank) to complete his Graduate courses

Explanation:

Given that:

Mr. Stripling needs to take out a loan of $20,000 to be able to pay for his Graduate course.

That means , he needs a principal amount of $20,000

SO , he has two options;

A - To borrow from Union Hill Bank which offers him 7% interest for 3 years.

B - To borrow from Emerson Bank which offers him 5% interest in 4 years

For Bank A; (Union Hill Bank)

Let Principal = $20,000

Rate = 7%

T = 3 years

We can easily calculated for the simple interest S.I by the formula:

`S.I = (PRT)/(100)`

`S.I = (20,000*7*3)/(100)`

`S.I = 200*7*3`

S.I = $4,200

For Bank B ; ( Emerson Bank)

`S.I = (PRT)/(100)`

`S.I = (20,000*5*4)/(100)`

`S.I = 200*5*4`

S.I = $4,000

Thus; it is best for Mr. Stripling to borrow money from Bank B ( Emerson Bank) to complete his Graduate courses.