Question
John has decided that he wants a newer car. So, he headed to the dealership, and rather than purchasing a model with 0% interest, the salesman encourages him to look at some of the new model year vehicles, with the statement, “With the 5.9% interest, it’s just pennies more a day.” John decides to purchase one of the newer model year vehicles. The increased cost is within $1000 of the old model year, so why not? His total purchase price ended up being $28998, including tax, tag, and title. He decided on a 5 year loan, and the interest is compounded daily.
3. How much will he pay throughout the life of the loan?
3. How much will he pay throughout the life of the loan?
Answers
Henry
P = Po(1+r)^n.
Po = $28,998.
r = (5.9%/360) / 100% = 0.00016389 = daily % rate expressed as a decimal.
n = 360Comp./yr * 5yrs = 1800 Compounding periods.
Plug the above values in the given Eq.
Answer: 38,789.99.
Po = $28,998.
r = (5.9%/360) / 100% = 0.00016389 = daily % rate expressed as a decimal.
n = 360Comp./yr * 5yrs = 1800 Compounding periods.
Plug the above values in the given Eq.
Answer: 38,789.99.