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15 December, 21:45

Two customers took out automobile loans. Katy took out a 5-year loan for $18,000 and paid 7.00% annual simple interest. Frank took out a 6-year loan for $18,000 and paid 6.00% annual simple interest. What is the difference between the amounts of interest Katy and Frank paid for their loans?

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  1. 15 December, 21:57
    0
    The difference between the amounts of interest Katy and Frank paid for their loans is $180

    Step-by-step explanation:

    The formula of the simple interest is I = Prt, where

    P is the amount of the loan r is the interest rate in decimal t is the time

    Katy took out a 5-year loan for $18,000 and paid 7.00% annual simple interest

    ∵ The amount of her loan is $18,000

    ∴ P = 18,000

    ∵ The annual simple interest is 7%

    ∴ r = 7% = 7 : 100 = 0.07

    ∵ The loan is for 5 years

    ∴ t = 5

    - Substitute these values in the formula above

    ∴ I = 18,000 (0.07) (5)

    ∴ I = 6,300

    ∴ Katy will pay $6,300 interest for her loan

    Frank took out a 6-year loan for $18,000 and paid 6.00% annual simple interest

    ∵ The amount of his loan is $18,000

    ∴ P = 18,000

    ∵ The annual simple interest is 6%

    ∴ r = 6% = 6 : 100 = 0.06

    ∵ The loan is for 6 years

    ∴ t = 6

    - Substitute these values in the formula above

    ∴ I = 18,000 (0.06) (6)

    ∴ I = 6,480

    ∴ Frank will pay $6,480 interest for his loan

    ∵ The difference between their interests = 6,480 - 6,300

    ∴ The difference between their interests = $180

    The difference between the amounts of interest Katy and Frank paid for their loans is $180
  2. 15 December, 22:05
    0
    180

    Step-by-step explanation:Apply the formula I = Prt, where I is interest, P is principle, r is rate, and t is time.

    I = 18,000 (

    7

    100

    ) (5) = 18,000 (0.07) (5) = 6,300

    I = 18,000 (

    6

    100

    ) (6) = 18,000 (0.06) (6) = 6,480

    Therefore, 6,480 - 6,300 = 180
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