Question

Suzanne has purchased a car with a list price of $23,860. She traded in her previous car, which was a Dodge in good condition, and financed the rest of the cost for five years at a rate of 11.62%, compounded monthly. The dealer gave her 85% of the listed trade-in price for her car. She was also responsible for 8.11% sales tax, a $1,695 vehicle registration fee, and a $228 documentation fee. If Suzanne makes a monthly payment of $455.96, which of the following was her original car?

Dodge Cars in Good Condition
Model/Year
2004
2005
2006
2007
2008
Viper
$7,068
$7,225
$7,626
$7,901
$8,116
Neon
$6,591
$6,777
$6,822
$7,191
$7,440
Intrepid
$8,285
$8,579
$8,699
$9,030
$9,121
Dakota
$7,578
$7,763
$7,945
$8,313
$8,581
a.
2004 Intrepid
b.
2008 Neon
c.
2005 Viper
d.
2007 Dakota


Please select the best answer from the choices provided

A
B
C
D

Answer 1

A

Work (brief): Dealer gives 85% of the listed trade‑in. For the 2004 Intrepid listed at $8,285 the trade‑in credit = 0.85(8,285) = $7,042.25. Tax on the purchase price = 0.0811(23,860) = $1,935.046. Total to finance = 23,860 + 1,935.046 + 1,695 + 228 − 7,042.25 = $20,675.796. With i = 0.1162/12 and n = 60 months the monthly payment = P * i / (1 − (1+i)^(−n)) ≈ $455.96, so the car is the 2004 Intrepid.