Explanation Given: The price of the car is $ 24 , 035 . A rebate of $ 1500 up front and balance at 6 % for 60 months is given and second case is for the first 36 month 0 % financing and for the remaining 24 months 6 % financing is given. Formula used: The Amortization Formula to calculate monthly payment M is given by, M = P ( p ( 1 + p ) T ( 1 + p ) T − 1 ) Here P is the principal, r is the APR, p is the monthly interest rate, and T is the number of payments over the life of the loan. Calculation: In the first case rebate is given to be $ 1500 and price of the car is $ 24 , 035 , the principle amount will be, $ 24 , 035 − $ 1500 = $ 22 , 535 APR of 6 % is, 6 12 = 0.5 % The Amortization Formula to calculate monthly payment M is given by, M = P ( p ( 1 + p ) T ( 1 + p ) T − 1 ) Substituting the values of 22535 for P , 0.05 for p and 60 for T in the above mentioned formula, M = 22535 ( 0.005 ( 1 + 0.005 ) 60 ( 1 + 0.005 ) 60 − 1 ) M = 22535 ( 0.005 ( 1.005 ) 60 ( 1.005 ) 60 − 1 ) M = 22535 ( 0

Excursions in Modern Mathematics (9th Edition)

9th Edition

ISBN: 9780134468372

Author: Peter Tannenbaum

Publisher: PEARSON

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Chapter 10, Problem 72E

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The better deal by computing monthly payments over 60 months.

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Chapter 10, Problem 71E

Chapter 10, Problem 73E

Chapter 10 Solutions

Excursions in Modern Mathematics (9th Edition)

Ch. 10 - Express each of the following percentages as a...Ch. 10 - Express each of the following percentages as a...Ch. 10 - Express each of the following percentages as a...Ch. 10 - Express each of the following percentages as a...Ch. 10 - Suppose that your lab scores in a biology class...Ch. 10 - There were four different sections of Financial...Ch. 10 - A 250-piece puzzle is missing 14 of its pieces...Ch. 10 - Jefferson Elementary School has 750 students. The...Ch. 10 - At the Happyville Mall, you buy a pair of earrings...Ch. 10 - Arvins tuition bill for last semester was 5760. If...

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The better deal by computing monthly payments over 60 months.

Solution Summary: The author explains that the better deal is (1) for monthly payments over 60 months.

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To find:

The better deal by computing monthly payments over 60 months.