Question

Mary is planning to buy a mobile phone that costs $500. A salesperson at the store informs her about four different installment plans that she can choose from.

plan A: a down payment of $50 and monthly payments of $40 for 12 months
plan B: a down payment of $100 and monthly payments of $80 for 6 months
plan C: no down payment and monthly payments of $60 for 12 months
plan D: no down payment and monthly payments of $100 for 6 months

Which plan will have the highest finance charge?

Answer 1

Explanation:

plan A

40 x 12 = 480 + 50 = 530

plan B

80 x 6 = 480 + 100 =580

plan c

60 x 12 = 720 no down payment

plan d

100 x 6 = 600 no down payment

so the highest finance charge will be plan c although it doesn't have down payment but the $60 charge every month for 12 months will estimate you the amount of $720