Richard wants to purchase a Jeep. The purchase price of the Jeep is $42,000

Question

The dealership will allow him to pay cash or finance the Jeep with a down payment of 4,000
and 72
monthly payments of $680
Richard chose to finance the jeep.

Answer the following questions.

a) What is the amount financed?

b) What is the total amount of monthly payments?

c} What is the amount of the finance charge?

Answer 1

Let's break down each of the questions related to Richard's Jeep purchase.

a) What is the amount financed?

To find the amount financed, we subtract the down payment from the purchase price of the Jeep:

\[ \text{Amount Financed} = \text{Purchase Price} - \text{Down Payment} \]

\[ \text{Amount Financed} = 42,000 - 4,000 = 38,000 \]

Answer: The amount financed is $38,000.

b) What is the total amount of monthly payments?

To calculate the total amount of monthly payments, we multiply the monthly payment by the number of payments:

\[ \text{Total Amount of Monthly Payments} = \text{Monthly Payment} \times \text{Number of Payments} \]

\[ \text{Total Amount of Monthly Payments} = 680 \times 72 = 48,960 \]

Answer: The total amount of monthly payments is $48,960.

c) What is the amount of the finance charge?

The finance charge is the total amount paid in monthly payments minus the amount financed. We can calculate it as follows:

\[ \text{Finance Charge} = \text{Total Amount of Monthly Payments} - \text{Amount Financed} \]

\[ \text{Finance Charge} = 48,960 - 38,000 = 10,960 \]

Answer: The amount of the finance charge is $10,960.