Question

Two customers took out bank loans.


• Mary took out a 4-year loan for $10,000 and paid 6.50% interest compounded annually

• Kyle took out a 6-year loan for $10,000 and paid 4.50% interest compounded annually


What is the difference between the amounts of interest Mary and Kyle paid for their loans?

A) $123.87

B) $157.94

C) $212.30

D) $287.69
I took the test it is B.)

Answer 1

Answer:

im pretty sure its b

Step-by-step explanation:

Answer 2

Answer:

302.08

Step-by-step explanation:

We will find out the interest payment for each person

The formula for the future value is as following:

FV = P $(1+\frac{r}{n} )^{rt}$ where:

• P is the principle
• r is the rate
• n: number of times
• t : number of years

Marry:

P: $10,000

r= 6.50%  = 0.065

n = 1

t = 4

=> FV = 10000*$(1+\frac{0.065}{1} )^{4}$ = $12864.66

=> Interest amount is: $12864.66 - $10,000  = $2864.66

Kyle :

P: $10,000

r= 4.50%  = 0.045

n = 1

t = 6

=> FV = = 10000*$(1+\frac{0.045}{1} )^{6}$ = $13022.6

=> Interest amount is: $13022.6 - $10,000  = $3022.6

the difference between the amounts of interest Mary and Kyle paid for their loans: $3022.6  -  $2864.66  =  $157.94