Question

Jim wants to borrow $7200. Bank M offers a 3% interest rate for a 5-year term. Bank K offers a 4% interest rate for a 5-year term. How much more interest will Jim pay if he takes the $7200 loan at the 4% interest rate for a 5-year term?

Answer 1

Given:
Principal : 7,200
Interest Rate:
Bank M : 3%
Bank K : 4%
Term : 5 years

Interest = Principal * Interest Rate * term

Bank M:
I = 7,200 * 0.03 * 5
I = 1,080

Bank K:
I = 7,200 * 0.04 * 5
I = 1,440

1,440 - 1,080 = 360 

Jim will pay 360 more interest if he takes the $7,200 loat at a 4% interest rate for a 5-year term.