Question

A new homeowner is purchasing a living room set for $2,784 and must decide between two monthly installment financing offers.

Offer 1: $225 down payment, remaining balanced financed at a 24.90% interest rate for 3 years.

Offer 2: $450 down payment, remaining balanced financed at a 22.90% interest rate for 4 years.

Part A: What is the total cost of offer 1? Explain which technology you used to solve and each step of your process. (3 points)

Part B: What is the total cost of offer 2? Explain which technology you used to solve and each step of your process. (3 points)

Part C: Which financing offer should the new homeowner choose? Explain your reasoning. (4 points)

Answer 1

this is what i put

Answer 2

Part A:
To calculate the total cost of offer 1, we first need to find the amount financed.
Amount financed = $2,784 - $225 = $2,559
Next, we calculate the total cost by adding the interest accrued over 3 years.
Total cost = $2,559 + ($2,559 * 24.90% * 3) = $3,816.96

Part B:
To find the total cost of offer 2, we first calculate the amount financed.
Amount financed = $2,784 - $450 = $2,334
Next, we calculate the total cost by adding the interest accrued over 4 years.
Total cost = $2,334 + ($2,334 * 22.90% * 4) = $3,922.74

Part C:
The new homeowner should choose offer 1. Even though offer 1 has a higher interest rate, the total cost is lower due to a shorter financing term. Offer 1 has a total cost of $3,816.96 compared to Offer 2's total cost of $3,922.74. By choosing offer 1, the homeowner will save money in the long run.