The purchase price of Beth's new car, including the sales tax, is $8,000. If she finances the car, making a down payment of $2,000 and paying off the rest in equal monthly installments, what will be the total cost of the car, including the sales tax and financing ?
(1) The installments are to be $200 per month.
(2) The installments will extend over a period of exactly 3 years
dollytaneja51 I'm not understanding how Statement (1) is insufficient. If we know the amount paid for the car is $8,000 inclusive of taxes and the down payment is $2,000, wouldn't we then infer that $8,000-$2,000=$6,000 is being paid off in installment loans?
Then we could say that since the installments are $200/month, we'd have $6,000/$200=30 months to pay off the car. The cost would still be equal to $8,000 in this case, right? Maybe I'm just not understanding the problem correctly. Also, Statement (1) seems to contradict Statement (2), since 30 months=2.5 yrs, not 3 years. Usually not something we see in a DS problem.
The key issue is that financing the car entails paying more than the $8,000 total. Since she isn't paying the entire sum upfront, she'll be paying through monthly installments, which will result in paying more. This is why the first statement is insufficient - while we know the monthly installments, we don't know the duration of those payments.