Jamie is saving for a trip to europe. she has an existing savings account that earns 2 percent annual interest and has a current balance of $4,500. jamie doesn’t want to use her current savings for vacation, so she decides to borrow the $1,500 she needs for travel expenses. she will repay the loan in exactly one year. the annual interest rate is 5 percent.

a. if jamie were to withdraw the $1,500 from her savings account to finance the trip, how much interest would she forgo? $. if jamie borrows the $1,500 how much will she pay in interest? $

forgo interest = $30

interest = $75

Explanation:

given data

annual interest = 2%

current balance = $4,500

borrow = $1,500

annual interest rate = 5 percent

to find out

how much interest would she forgo and how much will she pay in interest

solution

first we get here Forgo interest that is here

forgo interest = withdrawal amount × interest rate 1

put here value we get

forgo interest = $1500 × 2%

forgo interest = $30

and

now w get here pay in interest that is

interest = amount borrow × interest rate 2

put here value we get

interest = $1500 × 5%

interest = $75

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