Question

A car was purchased for

​$1410

down and payments of

​$249

at the end of each

month

for

four

years. Interest is

7​%

compounded

quarterlyquarterly.

What was the purchase price of the​ car? How much interest will be​ paid?

The purchase price of the car was

​$nothing.

​(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as​ needed.)

The amount of interest that will be paid is

​$nothing.

​(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as​ needed.)

Answer 1

Solution:-

Given that

A car was purchased for ​$1410 down and payments of ​$249 at the end of each month for four years. Interest is 7​% compounded quarterly.

What was the purchase price of the​ car? How much interest will be​ paid?

Purchase price of car = value of down payment + present value of monthly installments.

Monthly rate = 7%/12

= 0.583333%

No of payments = 4 * 12

= 48

present value of monthly payments

= $ 10398.2993

So, Purchase price = $ 1410 + $ 10398.2993

= 11808.299 $

Total amount of interest paid = Down payment + total monthly payments - purchase price

= $ 1410 + 48 * 249 - $ 11808.299

= $ 1553.701

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