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? explain.

Answer 1

Bank A:
A = 4500(1 + (0.09 × 6)) = 6930 
A = $ 6,930.00

The total amount accrued, principal plus interest,
from simple interest on a principal of $ 4,500.00
at a rate of 9% per year.
for 6 years is $ 6,930.00.

Bank B: 
A = 4500(1 + (0.11 × 4)) = 6480 
A = $ 6,480.00

The total amount accrued, principal plus interest,
from simple interest on a principal of $ 4,500.00
at a rate of 11% per year
for 4 years is $ 6,480.00.

So bank B would charge the least amount of interest.

Answer 2

Answer:

Bank B will charge her the least amount of interest with a Total amount owed of $6,480

Step-by-step explanation:

Great question, it is always good to ask away and get rid of any doubts that you may be having.

To solve this problem we will be using the Simple Interest Formula as shown below.

A = P(1 + rt)

Where:

• A = Total Amount (principal + interest)
• P = Principal Amount
• r = Rate of Interest per year in decimal
• t = Time Period involved in months or years

Now that we have the formula we can plug in the values for each bank and solve for the total amount they will charge Michelle.

$Bank.A = 4,500(1 + (0.09*6))$

$Bank.A = 4,500*1.54$

$Bank.A = 6,930$

$Bank.B = 4,500(1 + (0.11*4))$

$Bank.B = 4,500*1.44$

$Bank.B = 6,480$

Based on the calculations above we can see that Bank B will charge her the least amount of interest with a Total amount owed of $6,480

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