Explanation Given: The total amount is $ 10340 , the down payment is 5 % and Interest rate is 4 3 4 % . Formula used: The loan is add-on interest loan. The formula to calculate interest is, I = P × i n × n t … ( 1 ) Here, I is the interest amount, P is the loan amount, t is the term period in years, n is the number of terms in a year. The formula to calculate monthly payment is, p y m t = ( P + I ) n t … ( 2 ) Here, p y m t is the monthly payment, I is the interest amount and P is the loan amount, t is the term period in years, n is the number of terms in a year. Calculation: The loan amount can be calculated by using the formula below. P = total amount − down payment Substitute $ 10340 for total amount and 5 % of $ 10340 for down payment in above formula. P = $ 10340 − 5%of $ 10340 P = $ 10340 − ( 5 100 $ 10340 ) P = $ 10340 − ( 5 100 $ 10340 ) P = $ 9823 The interest rate is, To determine (b) To find: The APR of loan from dealer. To determine (c) To find: The APR of loan from bank. To determine (d) To explain: Which loan will be better.

8th Edition

ISBN: 8220100546112

Author: MOWRY

Publisher: Cengage Learning US

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Chapter 5.5, Problem 3E

To determine

(a)

To find:

The monthly payment.

To determine

(b)

To find:

The APR of loan from dealer.

To determine

(c)

To find:

The APR of loan from bank.

To determine

(d)

To explain:

Which loan will be better.

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Chapter 5.5, Problem 2E

Chapter 5.5, Problem 4E

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Chapter 5 Solutions

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(a) To find: The monthly payment.

Solution Summary: The author explains that the monthly payment is 311.74. The formula to calculate interest is, I is the interest amount, and P the loan amount.

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(a) To find: The monthly payment.

(b) To find: The APR of loan from dealer.

(c) To find: The APR of loan from bank.

(d) To explain: Which loan will be better.

Want to see the full answer?

Chapter 5 Solutions

(a)

To find:

The monthly payment.

(b)

To find:

The APR of loan from dealer.

(c)

To find:

The APR of loan from bank.

(d)

To explain:

Which loan will be better.