Question

Cassandra purchased a new car. The car had a list price of $16,870. Cassandra made a down payment of $1,800 and financed the rest, paying 12.3% interest compounded monthly over a payment period of four years. If Cassandra also had to pay 7.8% sales tax, a $895 vehicle registration fee, and a $68 documentation fee, what is her monthly payment?
a.
$446.74
b.
$459.42
c.
$461.41
d.
$507.09


Please select the best answer from the choices provided

A
B
C
D

Answer 1

B

Work (brief):
- Sales tax = 0.078(16870) = 1315.86. Total cost = 16870 + 1315.86 + 895 + 68 = 19148.86.
- Amount financed = 19148.86 − 1800 = 17348.86.
- Monthly rate = 0.123/12 = 0.01025, n = 48.
- Monthly payment = P*r / (1 − (1+r)^−n) = 17348.86(0.01025) / (1 − (1.01025)^−48) ≈ $459.42.