Arian is about to borrow $3,474.82 from his uncle. He has an option to repay the loan at the end of year 5 with 11% simple interest per year or with 6.41% interest per year, compounded annually. What is the difference of the total interest paid over 5 years between the two options? (enter the answer as a positive number) Solution 1) Interest paid when the principal is $3,474.82, time period is 5 years with 11% simple interest. Interest paid = PRT = $3,474.82 * 5 * 0.11 = $1,911.15 2) Interest paid when the principal is $3,474.82, time period is 5 years with 6.41% interest compounded annually. Interest paid = [$3,474.82 * (1.0641) 5 ] - $3,474.82 = $1,265.90 More interest is paid when loan is paid at 11% simple interest. Difference between the interest = $1,911.15 - $1,265.90 = $645.25 I hope my solution solves your query. Regards. .