Answered

Mary goes to the laundromat every week and it cost $5. she has found a combination washer/dryer that she could purchase for $1,200, but she would need to take out a loan. The local bank is offering her a 8% loan for the full amount. would it be cheaper to borrow money in a loan or continue going to the laundromat for the five years? Assume the washer and dryer will be financed for the five years using simple interest. which would cost more after 5 years: the loan or paying for weekly laundry? should she buy it?



Answer :

mathstudent55

Answer:

The loan costs $380 more.

She should not buy it.

Step-by-step explanation:

Simple interest

r = 8%

t = 5 years

P = $1200

i = Prt = ($1200)(0.08)(5) = $480

Total cost including original price and interest:

$1200 + $480 = $1680

Cost of doing laundry for $5 per week for 5 years:

5 × 52 × $5 = $1300

$1680 - $1300 = $380

The loan costs $380 more.

She should not buy it.