Answer:
Total he has to pay owner=$7121.25
b). Total amount he has to pay the bank=$7087.50
c). Since borrowing from the bank is cheaper than borrowing from the owner,he would save more if he just borrows from the bank.
d). The amount he saves=(7121.25-7087.50)=$33.75
Explanation:
a). Total he has to pay owner=Amount loaned+5.5% exact interest
where;
Amount loaned=$6,750
5.5% exact interest=(5.5/100)×6750=$371.25
Replacing;
Total he has to pay owner=(6750+371.25)=$7121.25
b). Amount he has to pay the bank
Total amount he has to pay the bank=Amount loaned+5% interest
where;
Amount loaned=6750
Interest=5%=(5/100)×6750=337.5
Replacing;
Total amount he has to pay the bank=(6750+337.50)=$7087.50
c). Since borrowing from the bank is cheaper than borrowing from the owner,he would save more if he just borrows from the bank. For example;
Total he pays the bank=$7087.50
Total he pays the owner=$7121.25
Get the difference=(7121.25-7087.50)=$33.75
Borrowing from the bank he saves $33.75 in comparison to borrowing from the owner
d). The amount he saves=(7121.25-7087.50)=$33.75
