Question

A couch sells for $820. Instead of paying the total amount at the time of purchase, the same couch can be bought by paying $400 down and $60 per month for 12 months. How much is saved by paying the total amount at the time of purchase?

Answer 1

$300

Explanation:

The couch is sold in two ways; outright payment or installment payment.

Outright payment would cost = $820

Installment payment = down payment + monthly charges

Down payment = $400

Monthly charges for a period of one year (12 months) = 12 × $60

= $720

Installment payment would cost = $400 + $720

= $1120

Amount saved by paying total amount at the time of purchase = $1120 - $820

= $300

Thus, the outright buying the couch would save $300.