Ward finances $20,000 to purchase a car. if he gets a 2.5% interest rate regardless of loan length, how much interest will ward save if he finances the $20,000 for 3 years rather than 5 years? a) $1,000 b) $10,000 c) $333.33 d) $3,333.33

You will use the formula to calculate simple interest for each period of time and then subtract the two amounts to find how much Ward will save.

I=prt

I = 20000 x 0.025 x 3

I = $1500 over 3 years

I = 20000 x 0.025 x 5

I = $2500 over 5 years

$2500-$1500 = $1000 in savings

the answer is A) $1,000

since you want the interest the formula is I = P x R x T  (principal x rate x time)

1) I = 20000 x 0.025 (you divide the rate by 100 to get a decimal) x 3

I =  $1500

2) I = 20000 x 0.025 x 5

I = $2500

then all you have to do is minus the two answers

$2500 - $1500 = $1000

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