SOLUTION: The price of a new car is $20,000. 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 9%/year
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-> SOLUTION: The price of a new car is $20,000. 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 9%/year
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Question 1202826: The price of a new car is $20,000. 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 9%/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 60 months? Over a period of 72 months?
60 months $
72 months $
(b) What will the interest charges be if she elects the 60-month plan? The 72-month plan?
60-month plan $
72-month plan $ Answer by Theo(13342) (Show Source):
the interest rate is 9% per year divided by 12 = .75% per month.
the payment required at the end of each month for the 60 months loan is equal to 311.38.
multiply that by 60 payment = 18682.8.
subtract that from 15000 = 3682.8.
here's what the resuls look like on the calculator.
the payment required at the end of each month for the 72 month loan is equal to 270.38.
multiply that by 70 payments = 19467.36.
subtract that from 15000 = 4467.36.
here's what the results look like on the calculator.
inputs are everything except the payment required at the end of each time period.
inputs are:
present vlue = 15000
future value = 0
number of time priods = 60 months and 72 months.
interest rate per time period = 9/1 = .75%
payments are made at the end of each time period.
the 72 month loan will reuire less monthly payments for a longer period of time.
the total interest on the 72 monh loan will be higher than the total interest on the 60 month.
