Question

A newspaper advertisement offers a $6500 used car for nothing down and 36 easy monthly payments of

Answer 1

Using simple interest, it is found that:

• The total amount paid was of $7,084.8.

• The finance charge was of $584.8.

• The simple interest rate was of 3%.

Simple Interest

Simple interest is used when there is a single compounding per time period.

The amount of interest after t years in is modeled by:

$I = Prt$

In which:

• P is the initial amount.

• r is the interest rate, as a decimal.

In this problem, the amount paid was of 36 monthly payments of

$196.80, hence:

36 x 196.80 = $7084.8.

The total amount paid was of $7,084.8.

The original price is of $6,500, hence the finance charge was of:

7084.8 - 6500 = $584.8.

For interest, we have that:

$I = 584.8, P = 6500, t = 3$, hence:

$I = Prt$

$584.8 = 6500(3)r$

$r = \frac{584.8}{6500 \times 3}$

$r = 0.03$

The simple interest rate was of 3%.

More can be learned about simple interest at brainly.com/question/25296782