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16 November, 10:51

Ashley is taking out a loan in the amount of $12,000. Her choices for the loan are a 4-year loan at 7.00% annual simple interest and a 5-year loan at 8.00% annual simple interest. What is the difference in the amount of interest Ashley would have to pay for these two loans?

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  1. 16 November, 11:01
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    Simple interest formula: A = P (1+Ryan)

    A = 12000 (1 + 0.07x4) = 15,360.00

    Amount of interest = 15360-12000 = 3,360.00

    A = 12000 (1+0.08x5) = 16,800.00

    Interest = 16,800-12,000 = 4,800.00

    Difference in interest = 4800 - 3360 = $1,440.00
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