Question

Car dealership will sell you a car for 15,000 for $380 a month for 48 months. What is the interest rate?

Answer 1

The total price of the car after 48 monthly payments of $380 is:

`48*380=18240`

then, using the simple interest formula, we can use these values to get the following:

`18240=15000(1+48r)`

where r represents the interest rate. Solving for r, we get:

`\begin{gathered} 18240=15000(1+48r) \\ \Rightarrow1+48r=(18240)/(15000)=1.216 \\ \Rightarrow48r=1.216-1=0.216 \\ \Rightarrow r=(0.216)/(48)=0.0045=0.45\% \end{gathered}`

therefore, the interest rate is 0.45%