Answer:
a. $461.67
b. $12771.73
Step-by-step explanation:
You want to know the monthly payment and total amount paid for a car that costs $12500 when $4000 is the down payment and the interest is 3.8% for 19 months.
Amortization
The formula for the monthly payment is ...
A = P(r/12)/(1 -(1 +r/12)^-n)
where P is the amount borrowed at interest rate r compounded monthly for n months.
Here, the down payment of $4000 reduces the loan amount to ...
$12500 -4000 = 8500
a. Monthly payment
So, the monthly payment is ...
A = 8500(0.038/12)/(1 -(1 +0.038/12)^-19) ≈ 461.67
Matteo needs to pay $461.67 each month.
b. Total paid
The total Matteo pays for the car will be the sum of the down payment and the 19 monthly payments:
total = $4000 +19×461.67 = $12771.73
Matteo will end up paying $12771.73 for his car.
