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?
$3,825
$1,581
$663
To find the amount of interest Georgia paid, we use the formula:
Interest = Principal x Rate x Time
Interest = $8,500 x 0.062 x 3 = $1,574
To find the amount of interest Paul paid, we use the same formula:
Interest = $8,500 x 0.044 x 6 = $2,376
The difference between the amounts of interest Georgia and Paul paid is $2,376 - $1,574 = $802.
Therefore, the correct answer is not provided in the options given.