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
To find the amount of interest paid for each loan, we can use the formula:
Interest = Principal * Rate * Time
For Hank's loan:
Principal = $5000
Rate = 4.50% = 0.045
Time = 4 years
Interest = $5000 * 0.045 * 4 = $900
For Holly's loan:
Principal = $5000
Rate = 3.50% = 0.035
Time = 6 years
Interest = $5000 * 0.035 * 6 = $1050
The difference between the amounts of interest paid is:
$1050 - $900 = $150
Therefore, the correct answer is C) $150