Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.6 Cars - Exercise Set 8.6: 1

Answer

The monthly payments are $\$244$ The interest is $\$1712$

Work Step by Step

We can use this formula to calculate the payments for a loan: $PMT = \frac{P~(\frac{r}{n})}{[1-(1+\frac{r}{n})^{-nt}~]}$ $PMT$ is the amount of the regular payment $P$ is the amount of the loan $r$ is the interest rate $n$ is the number of payments per year $t$ is the number of years $PMT = \frac{P~(\frac{r}{n})}{[1-(1+\frac{r}{n})^{-nt}~]}$ $PMT = \frac{(\$10,000)~(\frac{0.08}{12})}{[1-(1+\frac{0.08}{12})^{-(12)(4)}~]}$ $PMT = \$244$ The monthly payments are $\$244$ We can find the total amount paid. $\$244 \times 48 = \$11,712$ The interest is the difference between the total amount paid and the amount of the loan. $I = \$11,712 - \$10,000 = \$1712$ The interest is $\$1712$
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