Suzanne is looking at taking out a personal loan. Opportunity Loans is offering her $1600 at 3.45% for 1 year, with interest com
pounding monthly. General Loans is offering her $1600 at 4.2% for 1 year, with interest compounding quarterly. Assuming she makes no payments until the 1 year is up, how much interest will have accrued on each loan? On which loan will she earn the least amount of interest?
So the general formula for compound interest is where r is the interest rate, t is the time in years, and n is the amount of compounds per year. So plugging in the values for both equations you'll get
Opportunity Loans:
Now to find the interest accrued on this loan you simply subtract 1600 from the A or final amount
General Loans:
To find the interest we do the same thing we did in the previous problem
Opportunity loans has the least amount of interest after a year