Explanation:
a) To calculate the extra cost Edward had to pay, we can find the total amount he paid through monthly installments and then subtract the original cash price of the car.
Total amount paid through monthly installments = 60 installments * $940/month = $56400
Extra cost = Total amount paid - Cash price of the car
Extra cost = $56400 - $64000 = -$7600
b) To calculate the interest rate per year charged, we can find the total interest paid over the 60 monthly installments and then divide it by the original cash price of the car. Remember, the extra cost is negative, indicating that Edward paid less than the original price.
Total interest paid = Total amount paid - Down payment
Total interest paid = $56400 - $16000 = $40400
Interest rate per year = (Total interest paid / Cash price of the car) * 100%
Interest rate per year = ($40400 / $64000) * 100% ≈ 63.13%
So, Edward had to pay an extra cost of $7600, and the interest rate per year charged was approximately 63.13%