Question

Lupe made a down payment of $1600 toward the purchase of a new car. To pay the balance of the purchase price, she has secured a loan from her bank at the rate of 12%/year compounded monthly. Under the terms of her finance agreement she is required to make payments of $240/month for 48 mo. What is the cash price of the car? (Round your answer to the nearest cent.)

Answer 1

The cash price of the car is $ 51600

Explanation:

Interest = PRT ÷ 100

240 = { (x-1600) × 12% × (48÷12) } ÷ 100

240 = { (x-1600) × 0.12× 4 } ÷ 100

240 = { (x-1600) × 0.48}

100

Cross-multiply 100 with 240 and 0.48 with 240

240 × 100 = ( x-1600)

0.48

50,000 = x-1600

x = 50,000+ 1600

x= $51600 the cash price of the car