SOLUTION: The price of a new car is $16,000. Assume that an individual makes a down payment of 25% toward the purchase of the car and secures financing for the balance at the rate of 8%/year

Question 1192974: The price of a new car is $16,000. Assume that an individual makes a down payment of 25% toward the purchase of the car and secures financing for the balance at the rate of 8%/year compounded monthly. (Round your answers to the nearest cent.)
(a) What monthly payment will she be required to make if the car is financed over a period of 24 months? Over a period of 60 months?
24 months $
60 months $
(b) What will the interest charges be if she elects the 24-month plan? The 60-month plan?
24-month plan $
60-month plan $

Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
25% of 16000 = 4000.
amount to be financed is 12000.
at 8% compounded monthly:
24 month loan payment is equal to 542.73 payable at the end of each month.
60 month loan payment is equal to 243.32 payable at the end of each month.
the interest charges on the 24 month loan are 24 * 542.73 minus 12000 = 1025.52.
the interest charges on the 60 month loan are 60 * 243.32 minus 12000 = 2599.2.
here's an online calculator that you can use to get these results.
https://arachnoid.com/finance/index.html
here are the results from using this calculator.
inputs are everything except pmt.
output is pmt.

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