SOLUTION
Since you can afford a down payment of $2,500, the remaining money needed to purchase the car becomes
![\begin{gathered} 20,000-2,500 \\ =17,500 \end{gathered}](https://tex.z-dn.net/?f=%5Cbegin%7Bgathered%7D%2020%2C000-2%2C500%20%5C%5C%20%3D17%2C500%20%5Cend%7Bgathered%7D)
Now, we will find the simple interest on $17,500 for 48 months, which is 4 years. This becomes
![\begin{gathered} I=\frac{PRT}{100} \\ I=\frac{17,500\times4\times4}{100} \\ I=2,800\text{ dollars } \end{gathered}](https://tex.z-dn.net/?f=%5Cbegin%7Bgathered%7D%20I%3D%5Cfrac%7BPRT%7D%7B100%7D%20%5C%5C%20I%3D%5Cfrac%7B17%2C500%5Ctimes4%5Ctimes4%7D%7B100%7D%20%5C%5C%20I%3D2%2C800%5Ctext%7B%20dollars%20%7D%20%5Cend%7Bgathered%7D)
(a) What will your monthly payment be? $
We will add this interest to the $17,500 and divide by 48 months to get the monthly payment. This becomes
![\begin{gathered} 17,500+2,800=20,300 \\ \frac{20,300}{48}=422.91666 \\ =422.92 \end{gathered}](https://tex.z-dn.net/?f=%5Cbegin%7Bgathered%7D%2017%2C500%2B2%2C800%3D20%2C300%20%5C%5C%20%5Cfrac%7B20%2C300%7D%7B48%7D%3D422.91666%20%5C%5C%20%3D422.92%20%5Cend%7Bgathered%7D)
Hence, the answer is $422.92
(b) How much will you pay in total for the car? $
To get this, we add the $20,300 (that we divided by 48 months), to the initial down payment made. This becomes
![\begin{gathered} 20,300+2500 \\ =22,800 \end{gathered}](https://tex.z-dn.net/?f=%5Cbegin%7Bgathered%7D%2020%2C300%2B2500%20%5C%5C%20%3D22%2C800%20%5Cend%7Bgathered%7D)
Hence, the answer is $22,800
(c) How much will you pay in interest over the life of the loan? $
We have initially found the interest as 2,800 dollars.
Hence the answer is $2,800