Forrest purchased a car for $20,640. He made a down payment of $2,440. He applied for a five-year installment loan with an interest rate of 10.4%. What is the total cost of the car after five years?
20,640 - 2440 = 18,200
I = 18,200 * .104 * 5
I = 9,464
18,200 + 9,464 + 2,440 = ?
i got 30104, this is still not any of the answer choices....
To find the total cost of the car after five years, we need to calculate the amount of interest paid over the loan period.
First, let's calculate the loan amount:
Loan amount = Total cost of the car - Down payment
Loan amount = $20,640 - $2,440
Loan amount = $18,200
Next, let's calculate the total interest paid over five years:
Total interest = Loan amount * Interest rate * Loan duration
Total interest = $18,200 * 0.104 * 5
Total interest = $9,520
Finally, let's calculate the total cost of the car after five years:
Total cost of the car = Loan amount + Total interest
Total cost of the car = $18,200 + $9,520
Total cost of the car = $27,720
Therefore, the total cost of the car after five years is $27,720.
To find the total cost of the car after five years, we need to consider the interest on the loan.
First, let's calculate the amount being financed. This is the purchase price minus the down payment:
Amount being financed = Purchase price - Down payment
Amount being financed = $20,640 - $2,440
Amount being financed = $18,200
Now, let's calculate the interest for the five years. The formula for calculating simple interest is:
Interest = Principal * Rate * Time
Using this formula, we can find the interest on the loan:
Interest = Amount being financed * Interest rate * Time
Interest = $18,200 * 0.104 * 5 (assuming the interest rate is annual)
Interest = $9,496
Finally, we can calculate the total cost of the car after five years by adding the interest to the amount being financed:
Total cost = Amount being financed + Interest
Total cost = $18,200 + $9,496
Total cost = $27,696
Therefore, the total cost of the car after five years is $27,696.