Question

13. Bethany buys a used car for $9,000. She puts $600 down and finances the rest for 4 1/2 years at 5%annual interest. At the end of years, the $9000 car will have cost her $

Answer 1

$11,062.40

Explanation :

The formula for the future amount in a compounding interest is :

`A=P(1+(r)/(n))^(nt)`

Where P is the present value

r is the rate of interest

n is the number of compounding in a year

t is time in years

From the given problem,

She puts a downpayment of $600 so the remaining will be :

9000 - 600 = 8400, which she will be financing for 4.5 years

So P = 8400

r = 5% or 0.05

n = 1 (Since it will only be compounding once in 1 year - annually)

t = 4.5 years

Using the formula above :

`\begin{gathered} A=8400(1+(0.05)/(1))^(1(4.5)) \\ A=10462.40 \end{gathered}`

The value of the $9000 car after 4.5 years will be the sum of the downpayment and the future amount.

`600+10642.40=\$11,062.40`

The answer is $11,062.40