Question 1200914: The price of a new car is $40,000. 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 7%/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 36 months? Over a period of 60 months?
36 months:
60 months:
(b) What will the interest charges be if she elects the 36-month plan? The 60-month plan?
36-month plan:
60-month plan :
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! present value of loan = 40,000 minus .25 * 40,000 = .75 * 40,000 = 30,000.
interest rate = 7% pr year / 12 = .58333.....% per month.
number of months of loan equal 36 and 60.
monthly payment for 36 month loan is 926.31.
monthly payment for 60 month loan is 594.04.
total interest charges on 36 month loan are 36 * 926.31 minus 30,000 = 3347.16.
total interest charges on 60 month loan are 60 * 594.04 minus 30,000 = 5642.4.
the monthly payments were rounded to the nearest penny.
if not, then:
monthly payment for 36 month loan is 926.312906.
monthly payment for 60 month loan is 594.0359562.
total interest charges on 36 month loan are 36 * 926.312906 minus 30,000 = 3347.264615; rounds to 3347.26.
total interest charges on 60 month loan are 60 * 594.0359562 minus 30,000 = 5642.157373; rounds to 5642.16.
these are very minor differences, but they are there.
online calculator gave the rounded intermediate results.
ti-BA-ii calculator gave the less rounded intermediate results.
either answer is good, depending on how they are marked.
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