Tetsuo has decided to purchase a new car. He decides to put 10% down and finance the remaining balance. The bank
offers Tetsuo a 36 month loan at 6.71%. If the car is valued at $32,000, what will his monthly payments be?
a. $983.93
c. $782.65
b. $885.45
d. $688.88
Please select the best answer from the choices provided
A
B
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D
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Answers
Answer:
885.45
Step-by-step explanation:
Testuo monthly payments will be around 885$
What is InterestIt is a fee paid for borrowing money or other assets.
• the amount borrowed is called the principal.
• the interest is expressed as a percentage rate of the principal
for a given time interval.
It is given that
Value of the car = $32000
Time period of loan repayment = 36 months
T = 3 years
Rate of Interest = 6.71%
10% down amount from 32000 = 3200 $
So the amount he is putting for finance = 32000 - (0.1 × 32000)
= $28800
Rate of interest can be calculated from
I = P x R x T
I = Interest, P = Principle, R = Rate, T = Time
= (6.71 * 28800 * 3)/(100*12)
= $ 483.12
This is total interest for an year
In one month, rate of interest
= 483.12/12
= $40.26
The principal amount that will be payable per month
= 28800/36
= $800
Total amount payable will be
= $ ( 800 + 40.26 )
= $840
Hence, we can conclude, Tetsuo needs to pay $840.26 as monthly installments, so in the options given it is 885$
To know more about interest
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