Quantcast

A community for students. Sign up today!

Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing

Panda223RulerZ

  • 2 years ago

I really dont understand how to do this: A car dealer offers you two deals on a car that costs $16,000. Please calculate the monthly payment, given these two payment options the car dealer is offering. Payment Option 1: You can finance the car for 60 months with no interest if you make a $3,000 down payment. Payment Option 2: You can finance the car for 72 months (6 years) with 1% simple annual interest and no down payment. (Hint: To calculate simple annual interest, use the formula Interest = Principal * Rate * Time (in years). Add the amount of interest to the price of the car.) Which monthly payment amount is lower?

  • This Question is Closed
  1. bloodrain
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Payment Option 1: $16,000 - $1,000 = $15,000 after down payment $15,000 / 60months = $250/month Payment Option 2: $16,000 * 1.02 / 72months = $226.67/month so 2nd one is better one.

  2. jazy
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    Just solve for the monthly payment options. Payment Option 1) You can finance the car for 60 months with no interest if you make a $3,000 down payment. SO: 16,000 - 3,000 = 13,000 13,000 /60 = 216.666 Monthly payment: $216.67 Payment Option 2) You can finance the car for 72 months (6 years) with 1% simple annual interest and no down payment. SO: 16,000 divided into 6 years = 2666.67 Multiply by 1% interest... 0.1 * 2666.67 = 26.67 2666.67 + 26.67 = 2693.34 per year. Divide that by 12 months. 2693.34 /12 = 224.45 Monthly Payment: $224.45

  3. jazy
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    Compare the monthly payments. Which is cheaper?

  4. jazy
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    @bloodrain its $3,000 down payment not $1,000

  5. bloodrain
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    dam, im sorry about tht error :/

  6. Panda223RulerZ
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    Monthly payment 1. Thank you so much, Jazy(:

  7. bloodrain
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Payment Option 1: $16,000 - $3,000 = $13,000 after down payment $15,000 / 60months = about $216/month Payment Option 2: $16,000 * 1.02 / 72months = $226.67/month so 2nd one is better one.

  8. jazy
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    Welcome. (:

  9. jazy
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    By the way, the 0.1 was meant to be a 0.01.

  10. jazy
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    But the answer doesn't change, I just made a mistake writing it. (:

  11. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Ask a Question
Find more explanations on OpenStudy

Your question is ready. Sign up for free to start getting answers.

spraguer (Moderator)
5 → View Detailed Profile

is replying to Can someone tell me what button the professor is hitting...

23

  • Teamwork 19 Teammate
  • Problem Solving 19 Hero
  • You have blocked this person.
  • ✔ You're a fan Checking fan status...

Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.

This is the testimonial you wrote.
You haven't written a testimonial for Owlfred.