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Oli and Katrina are buying a new SUV. The sticker price is $47,500. They talked to their bank (loan A) and were offered a 6 year loan at 4.5% annual interest, resulting in monthly payments of $754.02. The dealership (loan B) claims the couple will pay less interest with them because the loan is shorter, 5 years, and the interest rate is barely higher at 6%, resulting in a monthly payment of $918.31.

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Answer:

Following are the answer to this question:

Step-by-step explanation:

In the given equation some information is missing, that is Loans "A and B".

Formula:

[tex]\bold{Total \ Payback = \ Montly \ instalment \times \ Number \ of \ Instalments} \\\\[/tex]

calculating total amount of Loan A:

[tex]= $754.02 \times 72\\\\= 54289.44[/tex]

calculating total amount of Loan B:

[tex]= $918.31 \times 60\\\\= 55098.6[/tex]

Calculate loan A:

[tex]\bold{ \ Int = \ Total\ Payment - \ Loan}\\\\[/tex]

      [tex]= $ 54289.44 - $ 47500\\\\= $ 6789.44[/tex]

Calculate loan B:

[tex]\bold{ \ Int = \ Total\ Payment - \ Loan}\\\\[/tex]

      [tex]= $ 55098.60 - $ 47500\\\\= $ 7598.60[/tex]

The Additional  value of the Int in loan B:

[tex]\bold{= \ Int \ in \ loan \ B - \ Int \ in \ loan \ A}[/tex]

[tex]= 7598.6 - 6789.44\\\\= 809.16[/tex]

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