You want to buy a 31000 car The company is offering a 78 int

You want to buy a $31,000 car. The company is offering a 7.8% interest rate for 4 years.
Round your answer to the nearest cent as needed.

a) What will your monthly payments be? $

b) How much interest will you pay over the entire loan period? $

Solution

Given that

Cost of car P = $31,000

Interest rate R = 7.8%

Time T = 4 years

a )   

Time T = 1/12

Simple interest for monthly I = PTR / 100

= ( $31000 x 1/12 x 7.8 ) /100

= $20150 / 100

= $201.50

Therefore,

Monthly paymet = $31000 + $201.50 = $31201.50

b )

Simple interest I = PTR / 100

= ( $31,000 x 4 x 7.8 ) /100

= $967200 / 100

= $9672

Therefore,

Total interest for entire loan period = $9672