Question

Serena would like to calculate the total cost of a car loan. She should _____.

A) multiply the amount of the loan by the APR
B) use this formula: P x (J / (1 – (1 + J)N))
C) use an online calculator or the formula: P(1+R/12)N
D) call a bank and talk to a loan officer

Answer 1

The answer is: the best available option is D) call a bank and talk to a loan officer

Step-by-step explanation:

The formula for calculating total loan cost is:

total loan cost = (P x r) x n

1 - (1 + r)ⁿ

Where:

• r = Monthly interest rate = yearly interest rate / 12
• P = Principal
• N = Total # of months ( years on the loan x 12)

Option A is directly wrong, option B calculates monthly payments and option C uses the present value formula

Answer 2

For the answer to the question above asking if Serena would like to calculate the total cost of a car loan. She should calculate the total cost of a car loan. She should multiply the amount of the loan by the APR.