Assum e the cars in Problems 43-46 can be purchased for 0% down for 60 months (i
ID: 2786849 • Letter: A
Question
Assum e the cars in Problems 43-46 can be purchased for 0% down for 60 months (in lieu of rebate). a. Find the monthly payment iffinanced for 60 months at 0% APR. b. Find the monthly payment iffinanced at 2.5% add-on interest for 60 months. c. Use the APR approximation formula for part b. d. State whether the 0% APR or the 2.5% add-on rate should be 43. A Dodge Ram that has a sticker price of $20,650 with factory 44. A BMW that has a sticker price of $62,490 with factory and 45. A car with a sticker price of $42,700 with factory and dealer 46. A car with a sticker price of $36,500 with factory and dealer preferred and dealer rebates of $2,000 dealer rebates of $6,000 rebates of $5,100 rebates of $4,200Explanation / Answer
44B.
Add on interest is type of interest in which intrest is calculated at begining of loan and add the principle and total interest in begining. monthly payment on add on loan is calculated by division of summation of principle and interest by number of period.
Car price = $62,490.
Factory Rebate = $6,000
Total Loan amount = $62, 490 - $6,000
= $56,490.
Interest amount for 60 month = $56,490 × 2.50% × (60 / 12)
= $7,061.25
Interest for 60 month is $7,061.25.
Total amount need to repay = $56,490 + $7,061.25
= $63,551.25.
Monthly Payment = $63,551.25 / 60
= $1,059.1875.
Monthly payment is $1,059.1875.
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