Answer:
Step-by-step explanation:
1) The formula for determining simple interest is expressed as
I = PRT/100
Where
I represents interest paid on the loan.
P represents the principal or amount taken as loan
R represents interest rate
T represents the duration of the loan in years.
From the information given,
P = 1200
R = 8%
T = 5 years
I = (1200 × 8 × 5)/100 = $480
The total amount that she would pay back after 5 years is
1200 + 480 = $1680
Assuming there are 52 weeks in a year, then in 5 years, the number of weeks would be
52 × 5 = 260 weeks
If she keeps on going to the laundromat every week, the total amount in 260 weeks is
5 × 260 = $1300
Therefore, it would cost more if she takes the loan.
She should not buy it.
2) Applying the simple interest formula,
I = (14000 × 5 × 3)/100 = $2100
number of monthly payments = (principal + total interest)/number of months.
number of months = 12 × 3 = 36 months
Therefore,
number of monthly payments = (14000 + 2100)/36 = $447.2
Since he would only consider buying it if the monthly payments is is $200, then he should not buy the car
