Shani borrowed $5000 at an annual interest rate of 4% compounded yearly. William borrowed the same amount of money at an annual interest rat

Question

Shani borrowed $5000 at an annual interest rate of 4% compounded yearly. William borrowed the same amount of money at an annual interest rate of 6% compounded yearly. How much more interest will William pay than Shani at the end of 3 years?

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Ngọc Hoa 5 months 2021-08-23T11:45:34+00:00 1 Answers 4 views 0

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    2021-08-23T11:46:47+00:00

    Answer: William will pay $ 330.76 more interest than Shani at the end of 3 years.

    Step-by-step explanation:

    Compound interest = P((1+r)^t-1) , P= principal , r= rate of interest , t= time

    Given: P = $5000 , t= 3 years

    For Shani , r= 4% = 0.04

    Compound interest = 5000((1+0.04)^3-1)

    =5000(1.124864-1)\\\\=5000(0.124864)\\\\=\$\ 624.32

    For William, r= 6%= 0.06

    Compound interest = 5000((1+0.06)^3-1)

    =5000(1.191016-1)\\\\=5000(0.191016)\\\\=\$\ 955.08

    Difference = $ ( 955.08- 624.32)

    = $ 330.76

    Hence, William will pay $ 330.76 more interest than Shani at the end of 3 years.

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