Question

pablo has an excellent fico score at 810 and is approved to borrow $9,000 at 4.6%. pablos friend, abraham, has a much lower score of 500 and will have to pay 12% for a loan of the same amount. how much less will pablo pay in simple interest in one year with the better credit score than abraham will pay? $724 $567 $488 $666

Explanation:

Step1: Calculate Pablo's simple interest

The simple - interest formula is \(I = Prt\), where \(P\) is the principal amount, \(r\) is the annual interest rate (in decimal form), and \(t\) is the time in years.
For Pablo, \(P=\$9000\), \(r = 0.046\), and \(t = 1\).
\(I_{Pablo}=9000\times0.046\times1=414\)

Step2: Calculate Abraham's simple interest

For Abraham, \(P = \$9000\), \(r=0.12\), and \(t = 1\).
\(I_{Abraham}=9000\times0.12\times1 = 1080\)

Step3: Find the difference in interest

\(I_{Abraham}-I_{Pablo}=1080 - 414=666\)

Answer:

\(\$666\)