Question

tim needs a new car while he attends college in the united states for the next three years. the car he would like has a msrp of $15,000. a local dealer can get him a 3-year loan with a 7% interest rate if tim can give them a $1,500 down payment.

Answer 1

Explanation:

(a) What is the amount being financed?

The amount being financed is $15,000 - $1,500 = $13,500

(b) What is the monthly payment for the loan?

To calculate the monthly payment, we can use the formula:

P = (r * A) / (1 - (1 + r)^-n)

where P is the monthly payment, r is the monthly interest rate (7%/12 = 0.58%), A is the amount being financed ($13,500), and n is the number of payments (3 years * 12 months/year = 36).

So, the monthly payment would be:

P = (0.0058 * $13,500) / (1 - (1 + 0.0058)^-36) = $408.14.

(c) What is the total amount paid for the loan, including interest and down payment?

The total amount paid for the loan would be 36 monthly payments * $408.14 + $1,500 = $15,053.04