Final answer:
To buy the boat, Donald needs to finance $26,987.50 and the total cost of the loan is $35,083.75. The boat dealer requires a 15% down payment.
Step-by-step explanation:
To determine the amount of money Donald needs to finance, we first need to calculate the down payment. The boat dealer requires a 15% down payment, so Donald needs to pay 15% of $31,750. This comes out to $4,762.50.
Next, we need to determine the amount that needs to be financed. This is the remaining balance after the down payment. So, we subtract the down payment from the total cost of the boat: $31,750 - $4,762.50 = $26,987.50.
Lastly, we need to calculate the total cost of the loan, which includes the principal amount and the interest. The interest rate is 6% and the loan term is 60 months. We can use the formula for simple interest to find the interest amount: I = PRT, where I is the interest, P is the principal, R is the rate, and T is the time in years. Plugging in the values, we get: I = $26,987.50 * 0.06 * (60/12) = $8,096.25.
Adding the interest amount to the principal, we get the total cost of the loan: $26,987.50 + $8,096.25 = $35,083.75.
Therefore, Donald needs to finance $26,987.50 and the total cost of the loan is $35,083.75.