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Sarah negotiated a price of $25,140.00 for a new Toyota Camry Hybrid Sedan. She is prepared to give a down payment of 15%Her credit union offered her a 5-year amortized loan for the remaining amount at a rate of 2%.

How much money will be paid in interest?

What will the monthly payment be?

How much will the car cost, in total?

If she got a simple interest loan at the same interest rate and time, how much would she pay in interest?

Respuesta :

sqdancefan

Answer:

  a) interest paid: $1104

  b) monthly payment: $374.55

  c) total cost: $26,244

  d) simple interest: $2136.90

Step-by-step explanation:

a)

The loan amount is $24,140 · (1 -15%) = $21,369

The amortization formula tells you the monthly payment.

  A = P(r/n)/(1 -(1 +r/n)^(-nt)) . . . . loan amount P at annual rate r compounded n times per year for t years

  A = $21,369(0.02/12)/(1 -(1 +0.02/12)^(-12·5)) ≈ $374.55

The total amount paid will be 60 times this, so ...

  total of payments = 60·$374.55 = $22,473

The interest paid is the difference between this and the loan amount:

  interest paid = $22,473 -21,369 = $1104

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b)

The monthly payments will be $374.55, as found above.

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c)

The total cost of the car will be the original price plus the interest paid:

  $25,140 +1,104 = $26,244

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d)

The simple interest on $20,519 for 5 years is ...

  I = Prt = $21,369 · 0.02 · 5 = $2136.90 . . . simple interest