Question

The price of a new car is $32,000. Assume that an individual makes a down payment of 25% toward the purchase of the car and secures financing for the balance at the rate of 7%/year compounded monthly. (Round your answers to the nearest cent.) (a) What monthly payment will she be required to make if the car is financed over a period of 48 months?

Over a period of 72 months?

48 months $

72 months $

(b) What will the interest charges be if she elects the 48-month plan? The 72-month plan?

48-month plan $

72-month plan $

Answer 1

=> The price of the car is given as $ 32,000, 25% is down payment, so loan amount will be:

* 75 % of 32,000 = $ 24,000

=> Now we will create Loan amortization Schedule for 48 months and 72 months:

* 48 months Loan Amortization Schedule :

* From the above table we can see that the monthly payment = $ 574.71 and Total Interest paid = $ 3,586.07

* 72 months Loan Amortization Schedule :

* From the above table we can see that the monthly payment = $ 409.18 and Total Interest paid = $ 5,460.68

=> Formula used in excel:

* 48 months Loan Amortization Schedule :

* 72 months Loan Amortization Schedule :