An installment contract for the purchase of a car requires payments of $251.06 at the end of each month for 3.75 years. Interest is 5% per annum compounded monthly. (a) What is the amount financed? (b) How much is the interest cost? (a) The amount financed is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (b) The interest is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter4: Time Value Of Money
Section4.17: Amortized Loans
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An installment contract for the purchase of a car requires payments of $251.06 at the end of each month for 3.75 years. Interest is 5% per annum compounded monthly.
(a) What is the amount financed?
(b) How much is the interest cost?
(a) The amount financed is $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(b) The interest is $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
Transcribed Image Text:An installment contract for the purchase of a car requires payments of $251.06 at the end of each month for 3.75 years. Interest is 5% per annum compounded monthly. (a) What is the amount financed? (b) How much is the interest cost? (a) The amount financed is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (b) The interest is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
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