Answer: To find the monthly payment for each option, we can use the following formula:
Monthly Payment = Total Cost * (Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Months))
For the option to finance at the store for 2 years at 14% interest:
Total Cost = $2,000
Monthly Interest Rate = 14% / 12 = 0.011667
Number of Months = 2 years x 12 months/year = 24 months
Substituting these values into the formula, we get:
Monthly Payment = $2,000 * 0.011667 / (1 - (1 + 0.011667)^(-24)) = $95.13
Therefore, the monthly payment for financing at the store for 2 years at 14% interest is $95.13.
For the option to use his credit card at 21% interest for 1 year:
Total Cost = $2,000
Monthly Interest Rate = 21% / 12 = 0.0175
Number of Months = 1 year x 12 months/year = 12 months
Substituting these values into the formula, we get:
Monthly Payment = $2,000 * 0.0175 / (1 - (1 + 0.0175)^(-12)) = $185.44
Therefore, the monthly payment for using his credit card at 21% interest for 1 year is $185.44.
To find the total repayment for each option, we can multiply the monthly payment by the number of months:
For the option to finance at the store for 2 years at 14% interest:
Total Repayment = $95.13/month x 24 months = $2,283.12
Therefore, the total repayment for financing at the store for 2 years at 14% interest is $2,283.12.
For the option to use his credit card at 21% interest for 1 year:
Total Repayment = $185.44/month x 12 months = $2,225.28
Therefore, the total repayment for using his credit card at 21% interest for 1 year is $2,225.28.
Explanation: