Question

Jordan wants to buy a new car. He found a great car at a dealership for $18,000. The dealership offered him a compound interest rate of 3.5% for 60 months. How much will he be paying in interest only?

A-$3,150.00
B-$21,150.00
C-$3,378.35
D-$21,378.35

Answer 1

$3,378.35

Explanation

Before we can get the interest, we need to get the amount after 60 60months

A = P(1+r)^t

A = 18000(1+0.035)^5

A = 18000(1.035^5)

A = 18000(1.1877)

A = $21,378.35

Interest = Amount - Principal

Interest = 21,378.35- 18000

Interest = $3,378.35

Hence he will be paying $3,378.35 as interest