ANSWER
Option 2
EXPLANATION
The cost of the Playstation is $450.
OPTION 1
6 months at 3% interest.
We have to split the amount into 6 and then find 3% of that and add it to the monthly price.
That is:
450 / 6 = $75
Amount per month is therefore:
[tex]\begin{gathered} A\text{ = }\frac{3}{100}\cdot75\text{ + 75} \\ A\text{ = }2.25\text{ + 75 = \$77.25} \end{gathered}[/tex]
OPTION 2
12 months at 5% interest.
Split into 12 instead of 6 and use 5%.
We have:
450/12 = $37.5
[tex]A\text{ = }\frac{5}{100}\cdot37.5\text{ + 37.5 = 1.875 + 37.5 = \$39.}38[/tex]
Therefore, option 2 has the smallest monthly payment.
