Question

Terry has just purchased a new car, which had a list price of $16,825. She had to pay 7.19% sales tax, a $1,128 vehicle registration fee, and a $190 documentation fee. Terry traded in her previous vehicle, a 2003 Honda Element in good condition to use as a downpayment. The dealer paid full price for her trade in. She financed the rest of the cost over five years at an interest rate of 10.59%, compounded monthly. What is her monthly payment? (Round all dollar values to the nearest cent.)
Honda Cars in Good Condition
Model/Year
2000
2001
2002
2003
Element
$5,887
$6,080
$6,225
$6,622
Odyssey
$8,450
$8,693
$8,928
$9,224
Insight
$4,384
$4,661
$5,006
$5,440
Accord
$6,356
$6,626
$6,817
$7,114

a.
$416.83
b.
$190.00
c.
$218.16
d.
$274.20

Answer 1

Step-by-step:

- Sales tax = 0.0719 × 16,825 = 1,209.72
- Total cost = 16,825 + 1,209.72 + 1,128 + 190 = 19,352.72
- Trade‑in (2003 Element) = 6,622.00
- Amount financed = 19,352.72 − 6,622.00 = 12,730.72

Loan: 5 years = 60 months, monthly rate r = 0.1059/12 = 0.008825.

Monthly payment formula: M = P·[r / (1 − (1+r)^−n)]
M = 12,730.72 · [0.008825 / (1 − (1.008825)^−60)] ≈ 274.28

Monthly payment ≈ $274.28 (closest choice: d. $274.20).