Answer:
The case 4- 5 year loan with a 3% simple interest yields MOST interest.
Step-by-step explanation:
Here, P = 10,000
Now, we need to calculate the Simple Interest in difference cases.
SIMPLE INTEREST = [tex]\frac{P \times R \times T}{100}[/tex]
CASE : 1 Time = 2 year, Rate = 4.75%
⇒SIMPLE INTEREST = [tex]\frac{10,000 \times 4.75 \times 2}{100}[/tex]
= 950
So, SI on $10,000 for 2 years on Rate 4.75% is $950.
CASE : 2 Time = 2 .5 year, Rate = 4%
⇒SIMPLE INTEREST = [tex]\frac{10,000 \times 4 \times 2.5}{100}[/tex]
= $1000
So, SI on $10,000 for 2.5 years on Rate 4% is $1000.
CASE : 3 Time = 3 year, Rate = 4.25%
⇒SIMPLE INTEREST = [tex]\frac{10,000 \times 4.25 \times 3}{100}[/tex]
= 1275
So, SI on $10,000 for 3 years on Rate 4.25% is $1275.
CASE : 4 Time = 5 year, Rate =3%
⇒SIMPLE INTEREST = [tex]\frac{10,000 \times 3 \times 5}{100}[/tex]
= 1500
So, SI on $10,000 for 5 years on Rate 3% is $1500.
Hence, the case 4 yields the MOST amount of interest.
simple interest rate 5 year loan with a 3% simple interest rate is option 4
