Two customers took out loans from a bank.
• Georgia took out a 3-year loan for $8,500 and paid 6.2% annual simple interest.
• Paul took out a 6-year loan for $8,500 and paid 4.4% annual simple interest.
What is the difference between the amounts of interest Georgia and Paul paid for their loans?
$2,244
$3,825
$1,581
$663
To calculate the total interest paid by each customer, we can use the formula for simple interest:
Interest = Principal x Rate x Time
For Georgia:
Principal = $8,500
Rate = 6.2%
Time = 3 years
Interest = $8,500 x 0.062 x 3 = $1,570
For Paul:
Principal = $8,500
Rate = 4.4%
Time = 6 years
Interest = $8,500 x 0.044 x 6 = $2,244
The difference between the amounts of interest Georgia and Paul paid for their loans is $2,244 - $1,570 = $674.
Therefore, the correct answer is $674, which is not one of the options provided.