Question

You lease a car valued at $23,495.00 for 3 years at $429.95/month with a $500.00 down payment. If interest is 30% of the payments, how much interest is paid over the 3 years?
(1 point)
Responses

$7,048.50

$4,643.46

$6,898.50

$4,793.46

Answer 1

To calculate the total interest paid over the 3 years of the lease, we can follow these steps:

1. **Calculate total payments made over the lease term**:
\[
\text{Total Payments} = \text{Monthly Payment} \times \text{Number of Months} + \text{Down Payment}
\]
- Monthly Payment = $429.95
- Number of Months = 3 years × 12 months/year = 36 months
- Down Payment = $500

\[
\text{Total Payments} = (429.95 \times 36) + 500 = 15,478.20 + 500 = 15,978.20
\]

2. **Calculate the total interest paid**:
Since it is given that 30% of the total payments is interest, we can calculate the interest as follows:
\[
\text{Total Interest} = \text{Total Payments} \times 30\%
\]

\[
\text{Total Interest} = 15,978.20 \times 0.30 = 4,793.46
\]

So, the total interest paid over the 3 years is **$4,793.46**.

The correct response is:

**$4,793.46**