compare a simple intrest of 11% and a simple intrest rate of 13% for a 400$ credit card loan that can be paid in full at the end of a fixed loan length of 2 years determine which intrest rate has a lower cost of credit find the cost of credit
To find out which interest rate has a lower cost of credit, we'll calculate the interest paid for each rate over the two-year loan period.
For a simple interest rate of 11%:
Interest = Principal * Rate * Time
Interest = $400 * 0.11 * 2
Interest = $88
For a simple interest rate of 13%:
Interest = Principal * Rate * Time
Interest = $400 * 0.13 * 2
Interest = $104
Therefore, the simple interest rate of 11% has a lower cost of credit. The cost of credit is $88.