Aveterinary student takes a loan to pay for the last year of school. the loan is $25,000 at 3.25 percent to be paid back over 10 years how much interest will be paid? if the student chose to pay back the loan in 7 years instead. how much interest would be saved?

Answer-

If he had paid the loan in 7 years instead of 10 years, he could have saved $2437.50

Solution-

As we are not provided with the compounding rate, so considering as simple interest with 3.25% annual interest rate.

we know,

For 10 years,

For 7 years,

The extra interest paid by him is,

Therefore, if he had paid the loan in 7 years instead of 10 years, he could have saved $2437.50

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