First step: multiple all.
(25,000) * (.05) * (4)
Second step: Find the answer
(25,000) * (.05) * (4) = $5000 (interest after 5 years) -first answer
Third step: replace the 4 with a 2 to find how much is payed after 2 years.
(25,000) * (.05)* (2)
Step 4: find answer
(25,000) * (.05) * (2) = $2,500 (interest payed after 2 years)-second answer
Final step!: subtract the two interests
$5,000 - $2,500 = $2,500!
You save $2,500 by paying the loan sooner!
Hope this helped :)
