Henry took out a 4 year loan for 5,000 and payed 4.2% simple annual interest. Ingrid took out a 6 year loan for 5,000 and payed 3.9% simple annual interest. What is the difference between the mounts of interest Henry and Ingrid payed for their Loans
Mathematics · High School · Mon Jan 18 2021
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Given:
Henry's loan
Principal Amount (P) = 5000
Rate ( r ) = 4.2% or 0.042
Term ( t ) = 4
Ingird's loan
Principal Amount (P) = 5000
Rate ( r ) = 3.9% or 0.039
Term ( t ) = 6
Formula for simple interest:
I = Prt
Solution:
In order to determine the difference in their payment for the interest, we separately solve for each loands.
Henry:
I = Prt
I = (5000)(0.042)(4)
I = 840
Ingrid:
I = Prt
I = (5000)(0.039)(6)
I = 1170
Difference in interest = 1170 - 840
Difference in interest = 330
Final answer:
The difference in their interest paid by Henry and Ingrid is 330, since Ingrid paid 1170, and Henry paid 840.