Question

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Over the life of a conventional 5-year car loan for $28,745 at 5.125%, total interest paid...

Over the life of a conventional 5-year car loan for $28,745 at 5.125%, total interest paid is closest to:

A.

$7,375.91.
B.

$3,901.08.
C.

$32,646.08.

Solutions

Expert Solution

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where,
EMI= Equal Monthly Payment
P= Loan Amount
R= Interest rate per period  
N= Number of periods
= [ $28745x0.004270833 x (1+0.004270833)^60]/[(1+0.004270833)^60 -1]
= [ $122.765094585( 1.004270833 )^60] / [(1.004270833 )^60 -1
=$544.1
Total payment made = $544.1*12*5
=32646-08
Interest Paid= $32646.08-28745
=$3901.08
Corect Option : B.$3901.08

jeff jeffy answered 2 years ago
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