A used motorcycle is priced at 3,438.if you borrow the money foe the motorcycle,your payments will be $165 a month for 24 months.how much will you save by paying cash?

Answer 1

165 * 24 = ?

Subtract 3,438 from the above product.

Answer 2

Yes, that is the desired answer.
However it is not really nearly that easy.
Assume you have 3438 in your back pocket.
If you take that loan you will pay a total of 3960
so the easy answer is you save
522
=======================
Now the hard part.
that is 261 per year interest

261/3438 = 7.6 percent

If you can make more than 7.6 percent interest with that money in your back pocket , you come out ahead with the loan.

Answer 3

It gets even more complicated when you consider that more than likely compound interest would have been used.

So at what rate are 24 payments equivalent to a present value of 3438 ?
165(1 - (1+x)^-24)/x = 3438, where x is the monthly rate
tough to solve, used Wolfram:

http://www.wolframalpha.com/input/?i=165(1+-+(1%2Bx)%5E-24)%2Fx+%3D+3438

x = .0116316
annual rate = 12(.0116316) = appr 13.96%

So the real rate of the loan is 14%
As Damon says, unless you can invest your $3438 at more than 14%, pay cash