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Financial Maths, STD2 EQ-Bank 24

Mei is purchasing a new car and has a choice between two finance packages.

Package A: Deposit of $5000, monthly repayments of $1150 for 4 years.

Package B: No deposit, monthly repayments of $1280 for 5 years.

  1. Determine the total cost of Package A.   (2 marks)
  2. Determine the total cost of Package B.  (2 marks)
  3. How much will Mei save by selecting the cheaper package?  (1 mark)
Show Answers Only

a.   \($60\,200\)

b.   \($76\,800\)

c.   \($16\,600\)

Show Worked Solution

a.    \(\text{Total repayments} (A)=1150\times 12\times 4=$55\,200\)

\(\text{Total cost of Package A}=5000+55\,200=$60\,200\)
 

b.    \(\text{Total repayments (B)}=1280\times 12\times 5=$76\,800\)

\(\text{Total cost of Package B}=$76\,800\ \text{(No deposit)}\)
 

c.    \(\text{Savings using Package A}=76\,800-60\,200=$16\,600\)