Calculate (a) the total installment price, (b) the carrying charges, and (c) the number of months needed to save the money at the monthly rate to buy the item below for its cash price (remember to round up). a bicycle with a cash price of $500, offered on the installment plan for $28 per month for 24 months. a. $ a0 b. $ a1 c. a2

Cash Price of Bicycle: $500

In Installment Plan, you have to pay $28 per month for 24 months.

A.

Total installment price is per month installment multiplied by number of months. So we have:

dollars

B.

A carrying charge is the cost associated with holding a financial instrument over a specific period of time. In this problem, it is the extra charge of availing the bicycle on installment plan. This is the extra (in total) you have to pay OVER the cash price because of taking up installment plan.

Carrying Charge = dollars

C.

Monthly rate of this problem is $28. If you were to save this amount per month to buy in cash price of $500, the amount of months it would take:

months

Rounding will give us 18 months.

A. $672

B. $172

C. 18 months

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