Question

You borrowed $200 from your brother and he's created 2 plans to help you decide how you want to pay it back. His plans are below.

Question 1: How much money did you borrow initially?

Question 2: How much does each plan have you paying back each week (assume there are 4 weeks in each month).

Question 3: Which plan would you choose and why?

Answer 1

Question 1

$200

Question 2

Plan A; The amount payed back per week = $5

Plan B; The amount payed back per week = $4

Question 3

Plan B

Explanation:

Question 1

The amount borrowed from the brother = $200

Question 2

The two plans payment terms created by the brother are;

Plan A,

Amount payed per 2 month = $40/(2 months)

Therefore;

The amount payed per week = $40/(2 months)/((8 weeks)/(2 months)) = $5/week

The amount payed per week for plan A = $5 per week

Plan B

The number of weeks the $200 is payed back = 50 weeks

∴ The amount payed per week = $200/(50 week) = $4/week

Question 3:

The plan to be chosen is Plan B

This is so as to afford enough time to pay back and to have a smaller amount of repayment each week which will reduce the likelihood of defaulting in repayment.