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A Chevrolet Sonic Hatchback costs $14,845.00. With a 15% down payment, you can have an amortized loan for 6 years at a rate of 4.5%.

A) What will the monthly payment be?

B) How much will the car cost, in total?

C) How much money will be paid in interest?

Answer :

Using simple interest, it is found that:

a) The monthly payment will be of $222.57.

b) In total, the car will cost $18,251.9275.

c) $16,025.1775 will be paid in interest.

The amount of money accrued after t years, using simple interest, with an initial value of P and a decimal rate of r is given by:

[tex]A(t) = P(1 + rt)[/tex]

In this problem:

  • Total cost of $14,845.00, with a down payment of 15%, hence the initial value that will accrue interest is [tex]P = 0.85(14845) = 12618.25[/tex].
  • Loan for 6 years, hence [tex]t = 6[/tex]
  • Rate of 4.5%, hence [tex]r = 0.045[/tex].

Item a:

The amount of money accrued will be of:

[tex]A(6) = 12618.25[1 + 0.045(6)] = 16025.1775 [/tex]

Payment over 6 x 12 = 72 months, hence, the monthly payment will be of:

[tex]m = \frac{16025.1775}{72} = 222.57[/tex]

The monthly payment will be of $222.57.

Item b:

The total cost is composed by:

  • Down payment of 15%, out of the amount of $14,845.00.
  • Interest of $16,025.1775.

Hence:

[tex]T = 0.15(14845) + 16025.1775 = 18251.9275[tex]

In total, the car will cost $18,251.9275.

Item c:

As found in item a, $16,025.1775 will be paid in interest.

A similar problem is given at https://brainly.com/question/13176347

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