Question

Paul is going to buy a collectible vintage painting from a local art gallery. The painting is priced at $600 in the gallery. The gallery owner does accept credit cards but prefers cash. In fact, he offers to give Paul a 5% discount if he can pay in cash. Paul doesn't have any cash but can get a cash advance on his credit card. His credit card has an APR of 16% on credit purchases and a 32% APR on cash advances. Assuming Paul wants to pay the painting off over 12 months, which of the following is true?

Answer 1

Answer:THE ANSWER IS B!!!!!!!

Step-by-step explanation:

Answer 2

The right answer for the question that is being asked and shown above is that: "It is cheaper for Paul to buy the painting using his credit card. He will only pay $58 per month on his credit card provider compared to the $62.70 monthly bill if he used cash advance."

Here's how to solve.
Given that the Painting priced at $600. If paid using credit card and in installment basis.
$600 x 16% = $96 interest on credit card balance
$600 + $96 = $696 total debt
$696 ÷ 12 months = $58 monthly payments

If paid using cash from cash advance.
$600 x 5% discount = $30
$600 - $30 = $570
$570 x 32% = $182.40 interest on cash advance
$570 + $182.40 = $752.40
$752.40 ÷ 12 months = $62.70 monthly payment