You want to buy a new sports coupe for $84,600and the finance office at the dealership has quoted you an APR of 7.1 percent, compounded monthly, for 72 months.How much interest will you pay over the life of the loan assuming you make all payments on a timely basis?

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Quizplus · Accepted Answer

To find the total interest paid, first calculate the monthly payment using the formula for an amortizing loan: PMT = [P*r*(1+r)^n] / [(1+r)^n - 1], where P is the principal ($84,600), r is the monthly interest rate (7.1%/12), and n is the number of payments (72). Then, multiply the monthly payment by the number of payments to find the total amount paid over the life of the loan. Subtract the principal from this total to find the interest paid. The correct interest amount is $19,542.

You Want to Buy a New Sports Coupe for $84,600and