Question

Due to your good​ credit, your bank reduces the interest rate on your ​$10 comma 000 loan from 8.4​% to 7.3​% per year. Thanks to the​ change, how much will you save in interest this​ year?

Answer 1

Answer:

The correct answer is $110.

Explanation:

According to the scenario, the given data are as follows:

loan amount = $10,000

Before interest = 8.4%

After interest = 7.3%

So, we can calculate the amount we save in interest can be calculated by using following formula:

Amount of savings in interest = loan amount × difference in interest rate

= $10,000 × ( 8.4% - 7.3% )

= $10,000 × 1.1%

= $10,000 × 0.011

= $110

Hence, the amount we save in interest this year is $110.