Personal Financial Literacy

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.

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.

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.

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.

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.

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.

Community college annual cost = 3,500 + 1,500 + 800 = 5,800; for 2 years: 5,800 × 2 = 11,600. University annual cost = 15,000 + 9,000 + 2,500 = 26,500; for 2 years: 26,500 × 2 = 53,000. Total 4-year cost = 11,600 + 53,000 = 64,600. A common mistake is to ignore books/commuting or room/board, leading to 58,000 or 53,000. Families can reduce the student's needed amount with contributions and by seeking scholarships; starting at a community college is a cost-lowering strategy, and student loans can cover remaining gaps if used carefully.

Annual total cost = 28,000 + 13,000 + 1,500 + 2,000 = 44,500. Subtract scholarships and family help: 44,500 − 6,000 − 10,000 = 28,500 per year. Over 4 years that is 28,500 × 4 = 114,000 the student must plan to cover via savings, work-study, and/or student loans. Improve affordability with more scholarships/grants, considering lower-cost options for some years, and saving early so investments can grow.

Simple: $I=prt=1200(0.04)(10)=480$, total $=1680$. Compound: $A=1200(1.04)^{10}\approx1200(1.480244)=1776.29$. Difference $=1776.29-1680=96.29$. Compound is larger because interest itself earns interest; the gap widens as $r$ or $t$ increase, which is why investments usually compound.