Question

If Glacier Construction Company can pay off its loan in 20 months at 11% rather than 32 months at 10%, how much money will the company save on a loan of $30,000$3,800$4,000$4,200$4,400None of these choices are correct.

Answer 1

The total interest paid can be calculated by:

$P\times r\times t$

Where P is the principal, r is the interest rate and t is the time in years.

For the first loan we have:

$30000\times0.11\times\frac{20}{12}=5500$

For the second loan we have:

$30000\times0.1\times\frac{32}{12}=8000$

Therefore the amount save is:

$8000-5500=2500$

Therefore none of the choices are correct.