Question

Lindsay needs to purchase a car. The car Lindsay is planning on

Answer 1

The quantity a lender costs a borrower and is a percent of the principal of the quantity loaned; is called as an interest rate. The total amount of interest she will pay is $418.68

What do you mean by interest on a loan?

A mortgage is normally mentioned on an annual foundation referred to as the once-a-year percent fee (APR). It is known as interest rate.

As per the information,

Costs = $10,000, Down payment is equal to $1,000; where PV is the amount owing = $9,000

Rate of interest is 3%, that is 3%/12 =  0.0025;

n is the number of periods = 3 x 12 = 36 months.

A) The dollar amount that Lindsay will need to finance is $9,000

B) Now, to calculate the installment amount to be paid that is P:

$PV = P(\frac{1 - (1 + r)^{-n} }{r} )$

$9,000 = P(\frac{1 - (1 + 0.0025)^{-36} }{0.0025} )\\\\\\9,000 = P\frac{ ( 1 - 0.9140)}{0.0025} \\\\9,000 = 34.4P\\\\P = 261.63\\\\Hence, the amount of installment that she will pay = \ 261.63$

C)The actual cost of the car after financing = $1,000 + $261.63 x 36 = $10418.68

The total amount of interest she will pay = $10418.68 - $10,000 = $418.68

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