Question

Chris purchased a transport van for $58,500. What is the total cost of the van if he made a $9,000 down payment and paid $625 each month for 6 years to pay off his loan?

a) $49,500
b) $58,500
c) $62,100
d) $66,000

Answer 1

To find the total cost of the van, calculate the sum of the monthly payments ($625 × 72 months = $45,000) and add the down payment ($45,000 + $9,000 = $54,000). However, the purchase price of $58,500 already includes these payments, so the total cost of the van is $58,500.

Step-by-step explanation:

The question involves calculating the total cost of a transport van considering the initial down payment and the monthly payments over a time period. Chris made a $9,000 down payment and paid $625 each month for 6 years to pay off his loan for the van.

To find the total cost, begin by calculating the total of the monthly payments. Multiply the monthly payment ($625) by the total number of months in 6 years (6 years × 12 months/year = 72 months). This equals:

$625/month × 72 months = $45,000

Now, add the down payment to this total:

$45,000 + $9,000 down payment = $54,000

However, since the purchase price of the van is given as $58,500, and this amount includes the down payment and the loan payments, Chris paid the listed price. Therefore, the total cost of the van is the purchase price:

$58,500

This is choice b), the correct answer to Chris's problem.