Question

A store sells a computer for $800. Customers can choose to receive a 25% discount and pay it offwith a loan at a simple interest rate of 9%, or they can choose to pay the full price and pay it offin 4 years with no interest. If the customer plans to pay it off in 4 years, which option is better?

Answer 1

Determine the price of customer after discount.

$\begin{gathered} 800-\frac{25}{100}\cdot800=800-200 \\ =600 \end{gathered}$

Determine the interest paid by individual over 4 years.

$\begin{gathered} I=\frac{600\cdot4\cdot9}{100} \\ =216 \end{gathered}$

The amount paid by individual at the end of 4 years is,

$\begin{gathered} A=600+216 \\ =816 \end{gathered}$

So after the discount the individual had to pay $816 and with no discount had to pay onle $800 after 4 years.

So individual must choose to pay off the price in 4 years without any discount and no interest.