Question

Big Ed’s car dealership is running a special on 2008 trucks. Big Ed offers financing at a rate of 6.71% on a loan with a term of 36 months, but he requires the customer to make a down payment of 15% of the cost of the vehicle. You are interested in a Car Crusher truck that costs $25,230. Not including the down payment, how much will you pay over the lifetime of the loan? a. $27,924.84 c. $23,735.88 b. $25,789.32 d. $21,445.50 Please select the best answer from the choices provided A B C D

Answer 1

Answer: C

Explanation:

25,230 x .15= 3,784.50

25,230- 3,784.50= 21,535

21,535/36= 598.20833

598.20833 x 1.0671= 638.348109

638.348109 x 36= 22,980.5319

Answer 2

Letter C $23,735.84.The result varies a few dollars, because during the solution an adjustment was made to the decimals.

Explanation:

1. Define the price of the vehicle you are going to buy with the dealer or seller

Principal: $25230

Rate= 6.71%

N= 36 months

Down payment=15% of the cost of the vehicle= (25230*0.15)=$3784.50

25230-3784.50=21445.5

2. Apply the amortization formula to determine the monthly payments. With this taxation, you will determine the payments applied to the principal and the copper of interest.

A=P*(r(1+r)^{n})/((1+r)^{n}-1).

A= amortization or monthly payments.

P=Principal

R=interest rate

N= the total number of months

a. Calculate the monthly interest rate. The annual interest rate is 6.71% percent. Divide it by 12 to get the monthly interest rate. The monthly interest rate is 0.5592 percent (6.71/12 = 0.5592)

A=21445.5*(0,005592 (1+0,005592)^{{36}})/(1+0,005592)^{{36}}-1.

A=21445.5*(0,00683/0,2223)

A=21445.5*0,03072=658.90

Total of the payment= 658.90*36=23720.40