Question

Jill takes a loan out for $15,000 for a car over 5 years at a 5% interest rate. Her

monthly payments are $283.11.
a. How much does Jill pay overall for her car?
b. How much does she pay in interest?

Answer 1

Answer to part a) 16,986.60

Answer to part b) 1,986.60

note: if you are entering these values into a computer system, then you may need to remove the commas.

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Step-by-step explanation:

Part a)

Jill's monthly payment is $283.11

5 years = 5*12 = 60 months

Over 60 months, she will pay a total of 60*283.11 = 16,986.60 dollars. This is the overall cost of the car if we ignore things like the down payment and any other upfront fees.

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Part b)

To find the amount of interest Jill paid back, subtract the result we got in part a) and the initial value, or principal, of the loan to get:

16,986.60 - 15,000 = 1,986.60

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Side note: Because we know the monthly payment, we dont need the interest rate (i.e., we never use it).