Question

John has decided that he wants a newer car. So, he headed to the dealership, and rather than purchasing a model with 0% interest, the salesman encourages him to look at some of the new model year vehicles, with the statement, “With the 5.9% interest, it’s just pennies more a day.” John decides to purchase one of the newer model year vehicles. The increased cost is within $1000 of the old model year, so why not? His total purchase price ended up being $28998, including tax, tag, and title. He decided on a 5 year loan, and the interest is compounded daily.


3. How much will he pay throughout the life of the loan?

Next part is:
4. If John decided to pay the vehicle off in 3 years, how much would he pay throughout the life of the loan?

Answer 1

\[28998=P(1+0.059/365)365(5)\]

Answer 2

38947.04, he would have paid 1343.01 less if he had bought the old car.

Answer 3

ok, thank you, but how do I get to that answr?

Answer 4

Compounded interest formula

\[V=P(1+\frac{r}{c})^{t*c} \]

V is the final value.
P is principal or initial amount.
r is interest rate in decimal form.
t is the number of years.
c is the number of compoundings done per year, since its every day in your case its 365.

Answer 5

ok, I figured that out, but what I cannot figure out is how to use the scientific calcualtor correctly in order to get the correct answer. PLEASE HELP ME!!!!