Question

Chad and Haley took a loan of $4000 each at 15% per annum for 3.5 years and 5 years, respectively. Find the difference in the simple interest paid by them.

• A. $600
• B. $500
• C. $400
• D. $900

Answer 1

The correct option is D $900

We know, simple interest
$=p\times r\times t$

Where, $p=$ principal, $r=$ annual interest rate (in decimal form) and $t=$ time period (in years)

Simple interest paid by Chad $=4000\times 0.15\times 3.5=\$2100$

Simple interest paid by Haley $=4000\times 0.15\times 5=\$3000$

Difference in simple interest $=3000-2100=\$900$