Comparing Loan Sources. Tom Angelo needs to borrow $1500 to expand his farm implement maintenance business. He learns that the local bank will lend him the money for two years at a rate of 10% compounded quarterly. After hearing this rate, Tom's grandfather offers to lend him the money for 2 years with a simple interest rate of 7%. How much money will Tom save by borrowing the money from his grandfather?

Question

Comparing Loan Sources.  Tom Angelo needs to borrow $1500 to expand his farm implement maintenance business.  He learns that the local bank will lend him the money for two years at a rate of 10% compounded quarterly.  After hearing this rate, Tom's grandfather offers to lend him the money for 2 years with a simple interest rate of 7%.  How much money will Tom save by borrowing the money from his grandfather?