Question

Michelle wants to borrow $4,500. Bank A will lend Michelle the money at a simple annual interest rate of 9% for 6 years. Bank B will lend her the money at 11% for 4 years. Which bank would charge Michelle the least amount of interest?

Answer 1

$\sf{\orange{\underline{\huge{\mathsf{ Bank\: A}}}}}$

$\sf{\bold{\green{\underline{\underline{Given}}}}}$

• Principle = Rs. 4500
• Rate = 9%
• Time = 6 years

______________________

$\sf{\bold{\green{\underline{\underline{To\:Find}}}}}$

• Simple Interest = ??

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$\sf{\bold{\green{\underline{\underline{Solution}}}}}$

$\sf{\red{\boxed{\bold{SI =\dfrac{ p\times r\times t}{100}}}}}$

⠀⠀⠀⠀

$\sf: \implies\: {\bold{ SI =\dfrac{ 4500\times 9 \times 6}{100}}}$

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$\sf: \implies\: {\bold{ SI ={ 45\times 9 \times 6}}}$

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$\sf: \implies\: {\bold{ SI ={ 45\times 54}}}$

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$\sf: \implies\: {\bold{ SI = Rs. 2430}}$

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$\sf{\bold{\green{\underline{\underline{Answer}}}}}$

• Michelle have to pay Rs. 2430 as interest if he borrows money from bank A

⠀⠀⠀⠀

$\sf{\orange{\underline{\huge{\mathsf{ Bank\: B}}}}}$

$\sf{\bold{\green{\underline{\underline{Given}}}}}$

• principle = Rs. 4500
• Rate = 11%
• Time = 4 years

______________________

$\sf{\bold{\green{\underline{\underline{To\:Find}}}}}$

• Simple Interest = ???

______________________

$\sf{\bold{\green{\underline{\underline{Solution}}}}}$

$\sf{\red{\boxed{\bold{SI =\dfrac{ p\times r\times t}{100}}}}}$

⠀⠀⠀⠀

$\sf: \implies\: {\bold{ SI =\dfrac{ 4500\times 11 \times 4}{100}}}$

⠀⠀⠀⠀

$\sf: \implies\: {\bold{ SI ={ 45\times 11 \times 4}}}$

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$\sf: \implies\: {\bold{ SI ={ 45\times 44}}}$

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$\sf: \implies\: {\bold{ SI = Rs. 1980}}$

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$\sf{\bold{\green{\underline{\underline{Answer}}}}}$

• Michelle have to pay Rs. 1980 as simple interest if he borrows money from bank B

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$\sf{\orange{\underline{\huge{\mathsf{Compare}}}}}$

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• Rs. 1980 < Rs. 2430 , therefore Bank B will amount less interest .

Answer 2

Answer:

Sample response: Michelle needs to calculate the interest for the length of each loan. Bank A will charge $2430 in interest and Bank B will charge $1980 in interest. She will save by borrowing from Bank B.

Explanation: