Answer:
(-) $29.26 per thousand for a 3-year 3.4% loan
(a) $5,240
(b) $153.32
(c) $279.52
Step-by-step explanation:
• Payment per thousand
The payment amount can be computed from the formula ...
A = P(r/n)/(1 -(1 +r/n)^(-nt))
where P is the principal amount, r is the annual rate, n is the number of payments per year, and t is the number of years.
For a $1000 3-year loan at 3.4%, this evaluates to ...
A = 1000(0.034/12)/(1 -(1 +0.034/12)^(-12·3)) ≈ $29.26
The monthly car payment per $1000 borrowed is $29.26.
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• Rudy's trade-in allowance and down payment will reduce the amount he finances to ...
$10,240 -3000 -2000 = $5,240
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• $5,240 = 5.24 × $1000, so Rudy's payment will be ...
5.24 × $29.26 = $153.32
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• The amount of interest Rudy pays is the difference between the amount paid back and the amount of the loan.
(36 mo)×($153.32/mo) - 5240 = $279.52
