Question

Lawrence purchased a used pickup truck for $16,550 by paying cash. If he had financed the truck with an installment plan, he would have had to pay a $3,000 down payment and 48 monthly installments of $390. How much did he save by paying cash?

Answer 1

$5,170

Explanation:

If he chose intallment plan, his cost are as follows:

Down Payment = $3000

and

Monthly 390 for 48 months is $390 * 48 = $18720

Total Cost (with financing) = $3000 + $18,720 = $21,720

Without financing, he paid directly by cash for $16,550. That is much less than $21,720. How much did he save?

We subtract and find:

21,720 - 16,550 = $5,170