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They decide to shop for the new house. They choose items that amount to $1,600.00....

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Accounting

They decide to shop for the new house. They choose items that amount to $1,600.00. The store has 2 options for purchasing:

  1. financing at 6.4% simple interest per year for 2 years with a 20% down payment.

  1. no down payment and financing at 6.5% simple interest for 3 years.

Answer each of the following questions separately, showing all your work to reach each answer.

  1. Which option should they choose if they want the smallest finance charge? Show all steps to support your answer.

  1. Which option should they choose if they want the smallest total installment price? Show all steps to support your answer

  1. Which option should they choose if they want the smallest amount of the monthly payment? Show all steps to support your answer

  1. If they decide to defer any purchases and take a $1,600 bonus that Maria will be getting from work and invest it at 2.5% per year simple interest, how long will it need to be invested to earn $250 interest?

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