Question

SHOW ALL YOUR WORK THAT JUSTIFIES THE STEPS LEADING TO YOUR ANSWERS. 1. A family purchased a new car for $18,500. The loan agency required a 15% down payment and financed the balance for 36 months with an APR of 6.0%. Determine the total finance charge and monthly payment for the loan.

Answer 1

Given, price of car $18,500

down payment of 15% i.e 15$ of 18,500 = 2775

total payment tobe financed with APR (Principle ) = 15,725

APR (annual interest) = 6%

interest per month (I)= 6/12 % = 0.5% per month

Total period (N) = 36 months.

The formula for calculating the EMI given by

EMI = [P x I x (1+I)^N]/[(1+I)^N-1]

substituting the given values in above formula,

we get EMI = $478.38 Per month.

Total finance charge is= down payment + EMI X 36

= 2775+ (478.38X36) =$19,996.68

= nearly equals to $20,000