Two customers took out loans from a bank.
• Hank took out a 4-year loan for $5,000 and paid 4.50% annual simple interest
• Holly took out a 6-year loan for $5,000 and paid 3.50% annual simple interest
What is the difference between the amounts of interest Hank and Holly paid for their loans?
Responses
A $75$75
B $100$100
C $150$150
D $300$300
To determine the interest paid by each customer, we can use the formula for simple interest:
Interest = Principal * Rate * Time
For Hank:
Interest = $5,000 * 0.045 * 4 years = $900
For Holly:
Interest = $5,000 * 0.035 * 6 years = $1,050
The difference in the amounts of interest paid is:
$1,050 - $900 = $150
Therefore, the answer is C) $150.