Question

Troy is buying a car that costs $15,000. He

plans to get a 5-year loan to pay for it. He
can get a loan for $15,000 or he can pay
$3,000 from his savings and get a loan
for the rest. The savings account pays 2%
simple interest per year. The simple interest
rate for the loan is 0.5% per year.
a. How much interest over a 5-year

Answer 1

300/75

Explanation:

Cost of the Car = $15,000

a) Rate of interest received on savings(r) = 2%

Amount in savings account(p) =$3000

Time period(t) = 5 years

simple intrest.

Interest received on savings account = $300

b) Rate of interest on loan = 0.5%

IF P= 15000

intrest.

Difference between the interest = $75

c) Taking loan of the whole amount that is of $15,000 is more reasonable because though the interest is more but Troy will receive interest($300) from his savings account as well. But if he withdraws $3000 from savings and takes the loan for the rest of the amount, he would have no earnings.