Question

You are debating about whether to buy a new computer for $800.00 or a refurbished computer with the same equipment for $640.00. If a savings account earns 4.5% APR interest, how much do you really save with a refurbished computer if you put the difference into the savings account for a year?

Answer 1

Answer:

$167.2

Step-by-step explanation:

It has been given that the price of a new computer is $800.00 and refurbished computer with the same equipment has a  price of $640.00.

Let us find the amount that we will save with a refurbished computer if we put the difference into the savings account for a year using simple interest formula.  

$A=P(1+rt)$, where A= Amount after t years, P=principal amount, r = interest rate (decimal form) and t=time.

Our principal amount will be the difference of prices of new computer and refurbished computer.

$\text{Principal amount}=800-640=160$

$\text{Interest rate}=\frac{4.5}{100}=0.045$  

Upon substituting our given values in above formula we will get,

$\text{Amount we will save with a refurbished computer}=160(1+0.045\times 1)$

$\text{Amount we will save with a refurbished computer}=160(1+0.045)$  

$\text{Amount we will save with a refurbished computer}=160(1.045)$

$\text{Amount we will save with a refurbished computer}=167.2$

Therefore, we will save $167.2 with refurbished computer when we put the difference into the savings account for a year.