GB-43-04-001 · Comparing payment plans
Plan A costs £50 upfront plus £40 a month for 36 months. Plan B costs £46 a month for 36 months, with 5% off the total. Compare the total costs and state which is cheaper and by how much.
Financial Maths: Comparing Payment Plans
Application of related method — Booklet p. 51
Method
1) Calculate Plan A = upfront + months × monthly
2) Calculate Plan B using percentage multiplier
3) Subtract to find difference
Worked Example (GB-43-04-001)
1)
Plan A = 50 + 36×40 = £1490.00.
2)
Plan B = 36×46×0.95 = £1573.20.
3)
Correct comparison and difference £83.20.
Ans =
A £1490.00; B £1573.20. Plan A is cheaper by £83.20.