Question

Loraine Black wants to pay her $1,287.50 annual insurance premium monthly. How much can she save by paying the premium annually?

Percent of Annual Premium
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Monthly Premiums=8.5%
Quarterly Premiums= 25.5%
Semi-Annual Premiums= 50.5%

a) $20.75
b) $18.75
c) $25.78
d) $21.75

Answer 1

Answer: c. She can save $25.78 by paying the premium annually.

We arrive at the answer as follows:

Loraine's annual insurance premium   $1,287.50

If she wants to pay monthly, she'll have to pay 8.5% of her annual premium.

So, her monthly premium will be $\mathbf{1,287.50* 0.085 = 109.4375 \approx 109.44}$

Her total annual payment for insurance will be $12*109.44 = 1313.28$

Her savings by paying insurance annually is $\mathbf{1313.28 - 1287.50 = 25.78}$