For the car loan described, give the following information.
A car dealer will sell you the $16,850 car of your dreams for $3,290 down and payments of $335.97 per month for 48 months.
(a) amount to be paid
$
(b) amount of interest
$
(c) interest rate (Round your answer to two decimal places.)
%
(d) APR (rounded to the nearest tenth percent)
%
To find the answers to the given questions, we can break down the information provided:
(a) The amount to be paid can be calculated by adding the down payment to the total payments made over the 48-month period. So, the formula will be:
Total amount to be paid = Down payment + (Monthly payment x Number of months)
Substituting the given values:
Total amount to be paid = $3,290 + ($335.97 x 48)
To find the amount, we will calculate the expression: 3,290 + (335.97 x 48) = $20,923.16.
So, the amount to be paid is $20,923.16.
(b) The amount of interest can be calculated by subtracting the price of the car from the amount to be paid.
Interest = Total amount to be paid - Price of the car
Substituting the given values:
Interest = $20,923.16 - $16,850
Calculating the expression: 20,923.16 - 16,850 = $4,073.16.
So, the amount of interest is $4,073.16.
(c) The interest rate can be calculated using the following formula:
Interest Rate = (Interest / Price of the car) x 100
Substituting the given values:
Interest Rate = (4,073.16 / 16,850) x 100
Calculating the expression: (4,073.16 / 16,850) x 100 = 24.15%.
So, the interest rate is 24.15%.
(d) The APR (Annual Percentage Rate) can be calculated by dividing the interest rate by the number of years (4) and rounding it to the nearest tenth percent.
APR = (Interest Rate / Number of years)
Substituting the given values:
APR = (24.15% / 4)
Calculating the expression: (24.15 / 4) = 6.04%.
So, the APR (rounded to the nearest tenth percent) is 6.04%.