Owen settled on a price of $7,870 for a new car. The dealer had to
add 4.5% sales tax to this price, but allowed a $1,200 trade-in for
Owen's old car. Although not a universal practice, please add the
sales tax to the price of the new car first and then deduct the trade-
in value. If the dealer required a 15% down payment, calculate the
amount of the purchase price that Owen financed.
a. $1,409.80
b. $1,424.20
c. $5,639.20
d. $5,970.53
First, let's calculate the sales tax:
$7,870 x 0.045 = $354.15
Now let's add the sales tax to the price of the new car:
$7,870 + $354.15 = $8,224.15
Next, let's deduct the trade-in value:
$8,224.15 - $1,200 = $7,024.15
Now let's calculate the down payment:
$7,024.15 x 0.15 = $1,053.62
Finally, let's subtract the down payment from the amount financed:
$7,024.15 - $1,053.62 = $5,970.53
So the answer is d. $5,970.53.