Personal Financial Literacy

Use simple interest $I = P r t$. For A: $I_A = 10000 \times 0.06 \times 3 = 1800$. For B: $I_B = 10000 \times 0.04 \times 5 = 2000$. Since $2000 > 1800$, B costs more. A higher rate increases cost, and more years increase cost; here the longer time outweighs the lower rate.

Annual total cost = 11,000 + 8,000 + 3,000 = 22,000. Over 4 years: 22,000 × 4 = 88,000. If you also consider the family contribution, that would reduce the student's share by 8,000 × 4 = 32,000 to 56,000, but the question asked for the total cost before contributions. To plan for the first year, the gap would be 22,000 − 8,000 = 14,000. A simple plan is saving 14,000 ÷ 4 = 3,500 per year if starting in 8th grade with no interest, or slightly less if savings earn interest (e.g., using the future value factor $\frac{(1+r)^n-1}{r}$). Strategies to reduce costs include starting at a community college, applying for scholarships, and using student loans responsibly to fill remaining gaps.

From the amortization output, interest paid is given directly as \$540. It also matches total paid minus principal paid (900 − 360 = 540). With high APR and minimum payments, most of the payment goes to interest, so the balance stays high.

Financial responsibility means choosing options that protect long‑term financial health. Saving for about 5 weeks lets Maya avoid interest and fees. The store card discount reduces the price to about 810 dollars, but carrying a balance at 25% APR can add well over 200 dollars in interest in a year if not paid off quickly. A 0% plan is only responsible if she can fully pay within the promo period; paying 100 dollars per month leaves a balance and triggers deferred interest from the purchase date, adding significant cost. An informal loan without a plan risks missed payments and damaged relationships. Paying cash avoids high‑interest debt and preserves future flexibility.

Simple: $I=prt=1000(0.05)(8)=400$ (amount $1400$). Compound: $A=p(1+r)^t=1000(1.05)^8\approx1477.46$, so interest $\approx477.46$. Difference $=477.46-400=77.46$, and compound earns more. Compound grows faster because interest earns interest; this advantage increases with higher $r$ and longer $t$, which is why most investments use compounding.

Cost: Paying cash or debit has no fees, but the credit card with 2% cashback returns \$12 on \$600 and, if the full statement is paid, no interest is charged. Layaway adds a \$30 fee, which is more than the \$12 reward. Convenience/security: Credit cards often offer better dispute and fraud protections than cash/debit. Budgeting/behavior: Using credit requires discipline—paying in full each month is essential so rewards are not wiped out by interest. For a one-time, affordable purchase, credit with rewards and full payoff is best.

Simple: $I=prt=500(0.03)(6)=90$ (amount $590$). Compound: $A=500(1.03)^6\approx500(1.194052)=597.03$, so interest $\approx97.03$. Compound earns about \$7.03$ more. Because $A=p(1+r)^t$ grows multiplicatively, the compound advantage increases with higher $r$ and longer $t$; real-world investments typically use compounding.

Cost: ACH autopay is free and prevents late fees; a 2.5% card fee adds up each month and outweighs small rewards. Convenience/security: Autopay is hands-off and reliable; mail risks delays and in-person costs time and travel. Budgeting/behavior: Autopay helps avoid missed payments but requires monitoring your balance to prevent overdrafts. Choosing free autopay balances cost and reliability best.

Simple interest: $I_A = 15000 \times 0.075 \times 4 = 4500$. $I_B = 15000 \times 0.055 \times 6 = 4950$. Since $4950 > 4500$, Option B costs more in total interest. Longer terms generally increase total interest even if the rate is lower.

Total cost is the total of all payments. Option A costs \$1,104, which is less than Option B's \$1,128. A lower monthly payment does not mean a lower total cost; the longer term adds more interest.