Using simple interest, it is found that:
a) The monthly payment will be of $222.57.
b) In total, the car will cost $18,251.9275.
c) $16,025.1775 will be paid in interest.
The amount of money accrued after t years, using simple interest, with an initial value of P and a decimal rate of r is given by:
[tex]A(t) = P(1 + rt)[/tex]
In this problem:
- Total cost of $14,845.00, with a down payment of 15%, hence the initial value that will accrue interest is [tex]P = 0.85(14845) = 12618.25[/tex].
- Loan for 6 years, hence [tex]t = 6[/tex]
- Rate of 4.5%, hence [tex]r = 0.045[/tex].
Item a:
The amount of money accrued will be of:
[tex]A(6) = 12618.25[1 + 0.045(6)] = 16025.1775
[/tex]
Payment over 6 x 12 = 72 months, hence, the monthly payment will be of:
[tex]m = \frac{16025.1775}{72} = 222.57[/tex]
The monthly payment will be of $222.57.
Item b:
The total cost is composed by:
- Down payment of 15%, out of the amount of $14,845.00.
- Interest of $16,025.1775.
Hence:
[tex]T = 0.15(14845) + 16025.1775 = 18251.9275[tex]
In total, the car will cost $18,251.9275.
Item c:
As found in item a, $16,025.1775 will be paid in interest.
A similar problem is given at https://brainly.com/question/13176347
