Question

10. Marie can afford a $250 per month car payment. She's found a 5 year loan at 7% interest.

a. How expensive of a car can she afford?
b. How much total money will she pay the loan company?
C. How much of that money is interest?

Answer 1

A) Marie can afford Car expensive of = $2139

B)The total amount she pay to loan company = $ 3000

C) The interest amount = $861

Explanation:

Given as :

Marie can afford car payment of =$ 250 per month

=$ = 250 × 12 = $3000 per year

She Found a loan for time period of = 5 years

The interest rate applied = 7%

Now ,

Amount of payment = Principal ×
`( 1+ (Rate)/(100))^(Time)`

Or, $3000 = The original value of car ×
`( 1+ (7)/(100))^(5)`

Or, $3000 = The original value of car × 1.4025

Or, The original value of car =
`(3000)/(1.4025)`

So, The original value of car = $2139.03

Now, Compound Interest = CI = Amount - Principal

Or, CI = $3000 - $2139

So, CI = $861

Hence Form the above solution, it is found that :

A) Marie can afford Car expensive of = $2139

B)The total amount she pay to loan company = $ 3000

C) The interest amount = $861 Answer