Question

If a TV set is bought on the installment plan there is a down payment of $25 and 12 monthly payments of $15 each. The same set may be bought for cash at 12% less than the installment price. The amount saved by making a cash payment is:

Answer 1

Amount saved by making a cash payment is $24.6

Explanation:

We start by calculating the amount to be paid if payment was by installments.

We are told that there would be a down payment of $25 and $15 every month for 12 months.

So total installment payment would be;

$25 + 12($15) = $25 + $180 = $205

Now let’s try and figure out the cash payment

For the cash payment, we have 12% less than installment payment.

Kindly note that 12% is same as 12/100 = 0.12

Thus, 12% less payment would be;

205-0.12(205) = 205 - 24.6 = $180.4

Thus, the amount saved if payment was cash would be;

$205 - $180.4 = $24.6