Question

I don't understand how's this work please help me out

Paul is going to buy a collectible vintage painting from a local art gallery. The painting is priced at $600 in the gallery. The gallery owner does accept credit cards but prefers cash. In fact, he offers to give Paul a 5% discount if he can pay in cash. Paul doesn't have any cash but can get a cash advance on his credit card. His credit card has an APR of 16% on credit purchases and a 32% APR on cash advances. Assuming Paul wants to pay the painting off over 12 months, which of the following is true?

Answer 1

a.Paul will pay a total of $696, over 12 months, if he purchases the painting with his credit card.
b.Paul will pay a total of $653.28, over 12 months, if he purchases the painting with his credit card.
c.Paul will pay a total of $782.40, over 12 months, if he purchases the painting with a cash advance for discounted purchase price.
d.Paul will pay a total of $708.96, over 12 months, if he purchases the painting with a cash advance for discounted purchase price.

Answer 2

Assume simple interest: the APR is the rate he will pay, once at the end of the year.

If he gets a cash advance, then he pays only 95% of the 600 price,
but has an additional 32% tacked on by the lender:
final = (0.95)(600)(1.32) = ???

analyze the credit card situation similarly, with no 5% discount:

compare your answers with the choices.

Answer 3

(0.95)(600)(1.32) = 752.4 so i'm guessing is B ?

Answer 4

No. Guessing isn't math!

If he uses his credit card, this is a 16% add-on, so use the multiplier
(1.16) times the base price (600), since this is not a cash purchase.
What number do you get? Is that among your choices?

Answer 5

TYes it was A & Thanks you really help me out