12
QuizMultiple Choice

Amortization

Question 12 • CARE_24_25_TX-Mathematical Models with Applications B

Big Ed’s car dealership is running a special on 2008 trucks. Big Ed offers financing at a rate of 6.71% on a loan with a term of 36 months, but he requires the customer to make a down payment of 15% of the cost of the vehicle. You are interested in a Car Crusher truck that costs $25,230. Not including the down payment, how much will you pay over the lifetime of the loan?

Answer
A
$27,924.84
B
$25,789.32
C
$23,735.88
D
$21,445.50

Explanation

The 15% down payment is $25,230 × 0.15 = $3,784.50, so the amount financed is $25,230 − $3,784.50 = $21,445.50. At 6.71% annual interest over 36 monthly payments, the monthly payment is about $659.33, for a total of $659.33 × 36 = $23,735.88 (using the unrounded payment). The correct choice is $23,735.88.

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