Question

Casey bought a $1200 computer system on the installment plan. He made a $300 down payment and makes monthly payments of $62.50 for 18 months. How much interest will he pay?

Answer 1

$225 in interest

Explanation:

We'll assume that the $1200 computer is fully paid after $300 down and monthly payments of $62.50 for 18 months. Lets add the 18 monthly payments to the down payment. Anything in excess of $1200 will have been the interest he paid.

18 payments of $62.50 = $1125

Down Payment = $ 300

Total = $1425

Since the computer only cost $1200, the difference must be for the interest: ($1425 - $1200) = $225 in interest

Answer 2

cost = $1200

he pays $300

he pays the rest in 18 installments of $62.5 = 18*62.5=$1125

price paid: 300+1125=$1425

interest paid: $300

he pays 18.75% in addition to the cash price

Explanation: