Question

Two thousand dollars is borrowed for one year at an interest rate of 1.1% per month. If the same
amount of money can be borrowed at an interest rate of 13.2% per year, how much could be saved in interest charges?

Answer 1

with a monthly compounding interest of 1.1%, total at the end of year will be $2,280.572, Interest Amount = $280.572
with a simple interest of 13.2% per year, total at the end of year will be $2,264.00
Interest Amount = $264.00
Thus, interest diff. = money that could be saved = $16.572.
Calculation details:
Manual method, I used excel to do below:
Month Amount Rate
1 2000 1.011
2 2022 1.011
3 2044.242 1.011
4 2066.729 1.011
5 2089.463 1.011
6 2112.447 1.011
7 2135.684 1.011
8 2159.176 1.011
9 2182.927 1.011
10 2206.939 1.011
11 2231.216 1.011
12 2255.759 1.011
13 2280.572
You can also use the equation at http://www.calculatorsoup.com/calculators/financial/compound-interest-calculator.php to get at same numbers.

Hope this helps. Feel free to revert if you need further explanations!