
Elementary Math Fractions, Percentages, Word Problems, Equations, Inequations, Factorization, Expansion 
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March 10th, 2014, 11:37 PM  #1 
Senior Member Joined: Oct 2013 From: Far far away Posts: 422 Thanks: 18  The better deal
Suppose that you have $1000 in a savings account that pays 4.8% interest per year. Suppose, also, that you owe $500 at 1.5% per month interest. a) if you pay the interest on your loan for one month so that you can collect one month's interest on $500 in your savings account, what is your net gain or loss? b) if you pay the loan back with $500 from your savings account rather than pay one month's interest on the loan, what is your net gain or loss? C) what strategy do you recommend? I couldn't understand this problem. So any help will be deeply appreciated. Thanks 
March 11th, 2014, 09:20 AM  #2 
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,415 Thanks: 1025  Re: The better deal
Loan, 1 month: 500 * .015 = 7.50 Savings, 1 month: 500 * (.048 / 12) = 2.00 Quite evident, right? Difference of 5.50: enough to pay barber to shave your beard :P 
March 12th, 2014, 08:24 AM  #3  
Senior Member Joined: Jan 2014 From: The backwoods of Northern Ontario Posts: 390 Thanks: 70  Re: The better deal
I don't understand the problem as it is written, either: Quote:
a) if you pay the interest on your loan for one month, you pay .015×500 = 7.50 The interest you receive on your savings for one month is .048×1000÷12 = 4.00 Thus you will have a loss of $3.50 b) if you pay back your loan from your savings, you will be receiving interest on your savings of $500, but will have no debt. Your interest will be .048×500÷12 = 2.00 Thus you will have a gain of $2.00  

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