Question

Ricky wants a new car that costs $15,000. His credit union will give him a loan at 4.75 percent for 4 years. What is the total cost Ricky will spend?

Answer 1

Answer: $18059.57 rounded to dollars and cents

Explanation:

15000 is his loan. But he has interest of 4.75 percent for 4 years.

having a 4.75 interest is the same as paying 104.75 of the price every year because you pay interest on the starting amount.

This is done for four years, so it is (104.75%)^4 * 15000

= 1.0475^4 * 15000= $18059.5691725 (rounding to dollars and cents will yields $18059.57)