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Example of Problem Solving: Comparing Purchase versus Rent To Own Cost

Example of Problem Solving:  Comparing Purchase versus Rent To Own Cost


– IN THIS PROBLEM,
YOU DECIDE TO SHOP FOR A NEW TV. THE TV YOU WANT COSTS
$520 WITH TAXES. HOWEVER, THE STORE OFFERS
A RENT-TO-OWN OPTION FOR $27 PER MONTH FOR 2 YEARS. HOW MUCH MORE WOULD YOU PAY IF
YOU USE THE RENT-TO-OWN OPTION? SO THE ONE-TIME
PURCHASE PRICE IS $520. THE RENT-TO-OWN OPTION IS
$27 PER MONTH FOR 2 YEARS. AND SINCE THERE’S
12 MONTHS IN 1 YEAR, THERE WOULD BE
24 MONTHS IN 2 YEARS. SO WE’LL PAY $27 FOR 24 MONTHS. SO THE COST FOR THE RENT-TO-OWN
OPTION WOULD BE $27 x 24. SO 27 x 24. MULTIPLY BY THE 4 FIRST. 4 x 7 IS 28. CARRY A 2.
4 x 2 WOULD BE 8 + 2. THAT’S 10. NOW MULTIPLY BY THIS 2 HERE. WE’RE REALLY MULTIPLYING BY 20, SO WE ADD A ZERO
TO THE ONES COLUMN. 2 x 7 IS 14. NOW WE’LL CARRY A 1. 2 x 2 IS 4 + 1. SO WE HAVE 5. WE HAVE 8, 4, AND 6. SO THE TOTAL RENT-TO-OWN
COST WOULD BE $648. SO WE WANT TO KNOW HOW MUCH
MORE THIS OPTION WOULD COST. WE NEED TO FIND
THE DIFFERENCE BETWEEN THE ONE-TIME PURCHASE COST
AND THE RENT-TO-OWN COST. SO WE’D HAVE $648 – $520. SO 8 – 0 IS 8. 4 – 2 IS 2. 6 – 5 IS 1. SO THE RENT-TO-OWN OPTION
WILL COST $128 MORE THAN THE ONE-TIME PURCHASE COST.

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