<u>Question:</u>
You are debating whether to buy a new computer for $1,360.00 with a discount of 10% and sales tax of 6.5% or a refurbished computer with the same equipment for $1,095.00 and sales tax of 5.75%. If a savings account earns a 3.75% APR, how much do you really save with a refurbished computer if you put the difference into
the savings account for a year and calculate using the simple interest formula?
<u>Answer:</u>
Tabulate the options:
New computer prize: Marked price -discount price+ Tax
= $1,360 - 10% of $ 1,360+ 6.5% ($1,360-10% of $1,360)
= $1, 303.56
Refurbished: Selling price +sale tax
=$1,095 + 5.75 % of $1,095
= $ 1, 157.96
Then,
The difference in price =Refurbished -New computer prize
= $ 1, 157.96 - $1, 303.56
=$145.60
And
Interest = $145.60*3.75% = $5.46
Now
Your total savings buying the refurbished computer would be
=The difference in prize + interest
$145.60 +$5.46 = $151.06
We save <u>$151.06</u> with a refurbished computer
