Question

FIAT LEXUS ES $55,000 at 8% with annual $55,000 at 10% compounded simple interest for 3 years annually for 24 months Mercedes. Which car is the cheapest? Benz drag your answerinere AUDI $55,000 at 4.8% with annual simple interest for 36 months $55,000 at 4% compounded annually for 48 months

Answer 1

The formula for the amount of car with principal value of P, annual rate r simple intrest and time t is,

$A=P+\frac{P\cdot r\cdot t}{100}$

Determine the amount of Fiat and Mercedes-Benz.

$\begin{gathered} A_F=55000+\frac{55000\cdot8\cdot3}{100} \\ =55000+13200 \\ =68200 \end{gathered}$

For Mercedes-Benz, time of 36 months is equal to 3 year.

$\begin{gathered} A_M=55000+\frac{55000\cdot4.8\cdot3}{100} \\ =55000+7920 \\ =62920 \end{gathered}$

The formula for the amount in compounr intrest is,

$A=P(1+\frac{r}{100})^t$

Determine the amount for cars Lexus and Audi.

24 months is equivalne to 2 years.

$\begin{gathered} A_L=55000(1+\frac{10}{100})^2 \\ =55000(1.1)^2 \\ =66550 \end{gathered}$

For Audi, 48 months is equaivalent to 4 years.

$\begin{gathered} A_A=55000\cdot(1+\frac{4}{100})^4 \\ =55000\cdot(1.04)^4 \\ =64342.22 \end{gathered}$

So the minimum amount is $62920. Thus cheapest car is Mercedes-Benz.