solving equations

Question

Ted wants to buy a 400.00$ bike. He has two options for payment. 

 

Option one: Ted can borrow the 400$ from his father and repay him 40$ a month for a year. 

 

Option two: The bike shop will finance the bike for one year at a 15% annual interest rate.

 

The formula for the total amount paid (a) is : a=p+prt, where( p) in the amount borrowed,( r) is the rate of interest and( t) is the time in years. 

 

Which option would cost ted the least amount of money? 

Answer 1

Meher,

 

Option One will be the product of payment and term, so 12*40 = $480

 

Option Two uses the provided equation of a = p + prt,

so a = 400 + 400*.15 %/year * 1 year, assuming the interest is a simple interest on the initial borrowed amount.

 

a = 400 + 60 = $460

 

Finance the bike!