You (or your parents) purchase a used car for $15,867.00 plus 5.25% sales tax. The down payment is 10% of the total cost and you (or your parents) have an excellent credit rating. What is your principal balance at the start of the loan?

Answer 1

First, calculate the total cost of the car including sales tax:
$15,867.00 + ($15,867.00 * 0.0525) = $15,867.00 + $834.94 = $16,701.94

Next, calculate the down payment:
$16,701.94 * 0.10 = $1,670.19

Subtract the down payment from the total cost to find the principal balance at the start of the loan:
$16,701.94 - $1,670.19 = $15,031.75

Therefore, the principal balance at the start of the loan is $15,031.75.