Suppose you see a car with an advertised price of $28,550 at $614.45 per month for 5 years. What is the amount of interest paid?
614.45(12)=7373.40(5)=36,867
36867-28,550=$8317.00 amount of interest paid
To determine the amount of interest paid on the car, we need to know the total cost of the car and the amount financed. Given that the car has an advertised price of $28,550 and is financed over 5 years with monthly payments of $614.45, we can calculate the amount financed as follows:
Amount Financed = Monthly Payment x Number of Payments
Amount Financed = $614.45 x (12 payments per year x 5 years)
Amount Financed = $614.45 x 60
Amount Financed = $36,867
To calculate the interest paid, we subtract the amount financed from the total cost of the car:
Interest Paid = Total Cost of the Car - Amount Financed
Interest Paid = $28,550 - $36,867
Interest Paid = -$8,317
The negative value indicates that the amount financed exceeds the total cost of the car, meaning that there is no interest paid in this scenario. It is possible that no interest is being charged on the car or that there are additional factors not considered in this calculation.
To calculate the amount of interest paid on the car, we need to know the total cost of the car and the monthly payments. From the information given, we know that the advertised price of the car is $28,550 and the monthly payments are $614.45 for 5 years.
To find the total cost of the car, we multiply the monthly payment by the number of months in the loan. In this case, the loan term is 5 years, which is equal to 60 months.
Total cost of the car = Monthly payment * Number of months
Total cost of the car = $614.45 * 60
Total cost of the car = $36,867
Now, to calculate the amount of interest paid, we subtract the initial cost of the car from the total cost. The initial cost of the car is equal to the advertised price.
Amount of interest paid = Total cost of the car - Advertised price
Amount of interest paid = $36,867 - $28,550
Amount of interest paid = $8,317
Therefore, the amount of interest paid on the car is $8,317.