Question

Barbara can pay either $80 per month or one lump sum of $800 per year for car insurance. How much does she save yearly if she chooses the lump sum payment option?

Answer 1

$160

Explanation:

In the monthly payment option she would pay $80 per month, therefore in a year (12 months) she would pay:

$80*12 = $960

We can see that this amount is greater than the $800 she would pay in the lump sum payment option.

The money she would save is:

$960 - $800 = $160

She would save $160 yearly with the lump sum payment option.