Assume the car can be purchased for 0% down for 60 months (in lieu of rebate).
A car with a sticker price of $42,300 with factory and dealer rebates of $5,100
(a) Find the monthly payment if financed for 60 months at 0% APR. (Round your answer to the nearest cent.)
(42,300 - 5,100) / 60 = ?
Assume the car can be purchased for 0% down for 60 months (in lieu of rebate).
A car with a sticker price of $42,850 with factory and dealer rebates of $5,100
(a) Find the monthly payment if financed for 60 months at 0% APR. (Round your answer to the nearest cent.)
$
(b) Find the monthly payment if financed at 2.5% add-on interest for 60 months. (Round your answer to the nearest cent.)
$
(c) Use the APR approximation formula to find the APR for part (b). (Round your answer to one decimal place.)
%
(d) State whether the 0% APR or the 2.5% add-on rate should be preferred.
0% APR
2.5% add-on rate
To calculate the monthly payment, we can use the formula for calculating a loan payment:
Monthly payment = (Loan amount)/(Loan term)
In this case, the loan amount is the sticker price minus the rebates, which is $42,300 - $5,100 = $37,200. The loan term is 60 months.
So, the monthly payment would be:
Monthly payment = $37,200 / 60 = $620
Therefore, the monthly payment, if financed for 60 months at 0% APR, would be $620.