Big Ed's car dealership is running a special on 2008 trucks. Big Ed offers financing at a rate of 6.71% on a loan with a term of 36 months, but he requires the customer to make a down payment of 15% of the cost of the vehicle. You are interested in a Car Crusher truck that costs $25,230. Not including the down payment, how much will you pay over the lifetime of the loan?

a.

$27,924.84

c.

$23,735.88

b.

$25,789.32

d.

$21,445.50

Question

Maximo Goodwin

Mathematics

2 November, 16:08

Big Ed's car dealership is running a special on 2008 trucks. Big Ed offers financing at a rate of 6.71% on a loan with a term of 36 months, but he requires the customer to make a down payment of 15% of the cost of the vehicle. You are interested in a Car Crusher truck that costs $25,230. Not including the down payment, how much will you pay over the lifetime of the loan?

a.

$27,924.84

c.

$23,735.88

b.

$25,789.32

d.

$21,445.50

+3

Answers (1)

Know the Answer?

Adrian Webb · Answer 1

Present value of annuity is given by PV = P (1 - (1 + r) ^-n) / r

25230 = P (1 - (1 + 0.0671/12) ^-36) / (0.0671/12)

P = 0.0671 (25230) / 12 (1 - (1 + 0.0671/12) ^-36) = 775.69

Therefore, you pay 36 x 775.69 = $27,924.84 over the life time of the loan.