Algebra question- please help!?
A car dealer offers you two deals on a car that costs $16,000. Please calculate the monthly payment, given these two payment options the car dealer is offering.
Payment Option 1: You can finance the car for 60 months with no interest if you make a $3,000 down payment.
Payment Option 2: You can finance the car for 72 months (6 years) with 1% simple annual interest and no down payment. (Hint: To calculate simple annual interest, use the formula Interest = Principal * Rate * Time (in years). Add the amount of interest to the price of the car.)
Which monthly payment amount is lower? Please explain how you arrived at your answer and show all of your work for each option.
Opt 1:you pay 16000- 3000 dollars during 60 months=>
13 000/ 60 per month=1300/6 per month
Opt 2:you pay 16 000*0.01*6+16000=16160 during 72 months=>16160/72 per month=224.44 monthly
first one is lower(and you will purchase the car cheaper, so the only case in which is opt 1preferable is when you do not have initial 3000$)
hope this was helpful