Question

Elon has misplaced the sales contract for his car and cannot remember the amount he originally financed. He does know that the​ add-on interest rate was 5.3 ​% and the loan required a total of 36 monthly payments of ​$ 314.76 each. How much did Elon​ borrow?

Answer 1

Elon originally borrowed $9,775.61, based on the 5.3% add-on interest rate and 36 monthly payments of $314.76 each.

Step-by-step explanation:

The student is asking how to determine the original loan amount borrowed by Elon, knowing only the add-on interest rate and the total number of monthly payments. To solve this, the following information will be assumed based on the typical process for loans with add-on interest:

1. Total number of payments (n) is 36.
2. Monthly payment amount (R) is $314.76.
3. Add-on interest rate (i) is 5.3% annually.

To find the original amount financed (P), you can use the add-on interest formula:

P = (R × n) / [1 + (i × (n / 12))]

By filling in the values, we get:

P = ($314.76 × 36) / [1 + (0.053 × (36 / 12))]

P = $11,331.36 / [1 + (0.053 × 3)]

P = $11,331.36 / [1 + 0.159]

P = $11,331.36 / 1.159

P = $9,775.61

The amount that Elon originally borrowed was $9,775.61.