Question

Oli and Katrina are buying a new SUV. The sticker price is $47,500. They talked to their bank (loan A) and were offered a 6 year loan at 4.5% annual interest, resulting in monthly payments of $754.02. The dealership (loan B) claims the couple will pay less interest with them because the loan is shorter, 5 years, and the interest rate is barely higher at 6%, resulting in a monthly payment of $918.31.

Answer 1

Following are the answer to this question:

Explanation:

In the given equation some information is missing, that is Loans "A and B".

Formula:

`\bold{Total \ Payback = \ Montly \ instalment * \ Number \ of \ Instalments} \\\\`

calculating total amount of Loan A:

`= $754.02 * 72\\\\= 54289.44`

calculating total amount of Loan B:

`= $918.31 * 60\\\\= 55098.6`

Calculate loan A:

`\bold{ \ Int = \ Total\ Payment - \ Loan}\\\\`

`= $ 54289.44 - $ 47500\\\\= $ 6789.44`

Calculate loan B:

`\bold{ \ Int = \ Total\ Payment - \ Loan}\\\\`

`= $ 55098.60 - $ 47500\\\\= $ 7598.60`

The Additional value of the Int in loan B:

`\bold{= \ Int \ in \ loan \ B - \ Int \ in \ loan \ A}`

`= 7598.6 - 6789.44\\\\= 809.16`