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

Answer:

$625

Step-by-step 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:

$I_{April}=Prt\\\\=25000\times \frac{4}{100}\times 5\\\\=5000\\\\I_{May}=Prt\\\\=25000\times \frac{3.75}{100}\times 6\\\\=5625\\\\\\\bigtriangleup I=I_{May}-I_{April}\\\\=5625-5000\\\\=\ 625$

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