Question

TIMED TEST PLEASE HELP

1. Larry is getting a loan to buy a car. The loan will be for 16,000 dollars and will be paid off over 4 years. One bank offers him an annual interest rate of 6%. which would make his payments 375.76 dollars. Another bank offers him an annual interest rate of 8%. Which would make his monthly payments 390.61 dollars

what is the overall finical benefit for Larry of taking the 6% loan?



AND



2. Susan has a credit card balance of 3,000 dollars. Her annual interest rate is 20%. If she pays 2777.90 dollars a month she will pay the balance off in 1 year if she pays 152.69 dollars a month she will pay the balance off in 2 years?

What is the overall financial benefit of Susan paying the credit card balance off in 1 year instead of 2?

Answer 1

1. The cost for the 6% loan total is 375.76*48=18036.48, and for the 8% loan is 390.61*48= 18749.28. So, the benefit would be (subtract these) 712.80 to get the 6% loan over the 8% loan.

2. I am going to assume that there is an extra 7 in the 2777.90. One year, she will pay 277.90*12=3334.80. Over 2 years she will pay 152.69*24=3664.56. The benefit would be (subtract) $329.76.

Answer 2

1 ) first offer
total payments
375.76×12×4
=18,036.48
Interest paid
18,036.48−16,000
=2,036.48
Second offer
Total payments
390.61×12×4
=18,749.28
Interest paid
18,749.28−16,000
=2,749.28
Larry will save of taking 6% loan
2,749.28−2,036.48=712.8. .answer

2) credit card 1
Total payments
277.09×12
=3,325.08
Interest paid
3,325.08−3,000
=325.08
Credit card 2
Total payments
152.69×12×2
=3,664.56
Interest paid
3,664.56−3,000
=664.56
Susan will save
664.56−325.08
=339.48...answer

Hope it helps!