Use estimation to select the best response. Do not calculate. Assume that there is an (unknown) interest rate that is charged. If you purchase an item for $1,195.95 and pay for it with monthly installments for 4 years, the monthly payment is ______.
A) about $25 per month
B) more than $100 per month
C) more than $25 per month and less than $100 per month
D) about $100 per month
E) less than $25 per month

Question

Quizplus · Accepted Answer

The total cost is $1,195.95, and there are 48 months in 4 years. Without calculating exactly, $1,195.95 divided by 48 is clearly more than $25 (since 25*48=1200, which is close but slightly more than the total cost without considering interest), but less than $100 (since 100*48=4800, which is far more than the total cost). Interest would increase the monthly payment, but it would still fall within the range of more than $25 and less than $100 per month.

Use Estimation to Select the Best Response