Question

Steven is taking out a loan in the amount of $5,000. His choices are a 3-year loan at 5% simple interest and a 5 -year loan at 4% simple interest. What is the difference in the amount of interest Steven would have to pay for each of these two loans?

Answer 1

I do believe it’s 250$

**The first choice:**
Principal: 5,000$
Rate(%): 5
Time(year): 3 years
A: 5,750$

**Second choice**
Principal: 5,000$
Rate(%): 4%
Time(year): 5 years
A: 6,000$

6,000-5,750=250$

Hope this helps!