Answer:
Option A is better.
Step-by-step explanation:
We will observe both plans one by one to determine which one is better i.e. which one will has less interest to pay.
So,
Option A:
Down Payment: $1,000
Monthly payment for 3 years: $85
The total amount in installments will be:
[tex]=Amount\ per\ month * months\\= 85*36\\=3060[/tex]
The total price of bike will be:
[tex]Total\ price = Downpayment +Installments\\= 1000+3060\\= 4060\\Interest = Total\ price - Purchase \\= 4060-3500\\=560[/tex]
Option B:
Down Payment: $1,200
Monthly payment for 3 years: $85
The total amount in installments will be:
[tex]=Amount\ per\ month * months\\= 85*36\\=3060[/tex]
The total price of bike will be:
[tex]Total\ price = Downpayment +Installments\\= 1200+3060\\= 4260\\Interest = Total\ price - Purchase \\= 4260-3500\\=760[/tex]
We can see that interest in Option A is less than interest in Option B that means Mr. Cardwell will have to pay less amount in Option A.
Hence,
Option A is better.
