Question

Ashley bought a new car for $25,000. She paid a 20% down payment and financed the remaining balance for 48 months with an APR of 4.1%. Assuming she made monthly payments, what is the total cost of Ashley's car? Round your answer to the nearest cent, if necessary.

a. $30,625.60
b. $26,178.40
c. $28,410.20
d. $27,952.90

Answer 1

To find the total cost of Ashley's car, calculate the down payment and financed balance. Then, use the formula to calculate the monthly payment. Add the down payment to the total amount paid over the 48 months to find the total cost. Therefore, the correct option is A.

Step-by-step explanation:

To find the total cost of Ashley's car, we need to calculate the amount of the down payment and the financed balance, as well as the interest she will pay over the 48 months.

1. The down payment is 20% of $25,000, which is $5,000.
2. The financed balance is $25,000 - $5,000 = $20,000.
3. To calculate the monthly payment, we can use the formula for calculating the monthly payment on a loan: Monthly Payment = (Loan amount * Interest rate) / (1 - (1 + Interest rate)^-Number of months).
4. Plugging in the values, we have Monthly Payment = ($20,000 * 0.041) / (1 - (1 + 0.041)^-48) = $459.37.
5. The total cost of the car is the down payment plus the total amount paid over the 48 months, which is $5,000 + ($459.37 * 48) = $30,625.76.

Therefore, the total cost of Ashley's car is $30,625.76, rounded to the nearest cent.