Sarah takes out a loan for $30,000. She has two choices for the loan; a 5 year loan with 5% simple interest or a 7 year loan with 4% compound interest. What is the difference in the amount of interest she would owe?

Question

Nathalie Warner

Mathematics

12 April, 20:29

Sarah takes out a loan for $30,000. She has two choices for the loan; a 5 year loan with 5% simple interest or a 7 year loan with 4% compound interest. What is the difference in the amount of interest she would owe?

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Answers (1)

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Kristopher · Answer 1

5%

Total interest paid:

$5,617.46

Total payments:

$35,617.46

4%

Total interest paid:

$4,445.43

Total payments:

$34,445.43

Your Anwser Would Be 1172.03