Problema Solution
A prospective bridegroom wants to buy an engagement ring. Two jewelry stores each show him a ring at a cost of $2400. One jeweler requires a 20% down payment with the balance to be paid at the end of one year at 11% simple interest. The other jeweler requires a 25% down payment with the balance to be paid at the end of one year at 12% simple interest. What is the difference in total cost?
Answer provided by our tutors
One jeweler requires a 20% down payment with the balance to be paid at the end of one year at 11% simple interest:
0.20*2400 = $480 down payment
(2400 - 480)*0.11 = $211.2 is the interest
the total cost will be 2400 + 211.2 = $2,611.2
The other jeweler requires a 25% down payment with the balance to be paid at the end of one year at 12% simple interest:
0.25*2400 = $600
(2400 - 600)*0.12 = $216 is the interest
the total cost will be: 2400 + 216 = $2,616
the difference in total cost is:
$2,616 - $2,611.2 = $4.8.