i need help with this

Question

Nancy purchased a hot tub at a total price of $6995. She made a $1200 down payment and financed the rest at 10.4% compounded monthly. Nancy can repay the loan in 36 months or 48 months. How much interest will Nancy save is she repays the loan in 36 months instead of 48 months?

Answer 1

Hello Cone.

She has 6995 - 1200 = 5795 after down payment.

You can use compound interest formula for the rest

A: final amount

P: Initial balance

r:interest rate

n: number of times interest applied per period

t: number of times periods elapsed

for 48 month: A = 5795(1 +0.104/12)^48

for 36 month: A = 5795(1 +0.104/12)^36

Please plug them into the calculator and find the answers. At the end you can find difference of that numbers.

Hope that helps. If you have further questions please let me know