A car dealer offers you two deals on a car that costs $16,000.Please calculate the monthly payment, given these two payment options the car dealer is offering.

Payment Option 1: You can finance the car for 60 months with no interest if you make a $1,000 down payment.

Payment Option 2: You can finance the car for 72 months (6 years) with 2% simple annual interest and no down payment. (Hint: To calculate simple annual interest, use the formula Interest = Principal * Rate * Time. Add the amount of interest to the price of the car.)

Which monthly payment amount is lower? Please explain ho

Question

A car dealer offers you two deals on a car that costs $16,000.Please calculate the monthly payment, given these two payment options the car dealer is offering.

Payment Option 1: You can finance the car for 60 months with no interest if you make a $1,000 down payment.

Payment Option 2: You can finance the car for 72 months (6 years) with 2% simple annual interest and no down payment. (Hint: To calculate simple annual interest, use the formula Interest = Principal * Rate * Time. Add the amount of interest to the price of the car.)

Which monthly payment amount is lower? Please explain ho

anonymous · Answer

Please explain how you arrived at your answer and show all of your work.

anonymous · Answer

Ok let's do option 1 first...if you place 1000$ down, how much do you have left to pay?

anonymous · Answer

15,000?

anonymous · Answer

Correct. Now spread that out over 60 months...how much are you paying per month?

anonymous · Answer

250

anonymous · Answer

Ok good so thats the monthly amount for option 1

anonymous · Answer

For option 2, we should first figure out the cost of the car as original cost*(1.02)*6

anonymous · Answer

16000*0.02*72 = 23040
23040/72 = 320

anonymous · Answer

isint it supposed to be 72 months

anonymous · Answer

not 6

anonymous · Answer

but it's an annual interest rate right 72 months = 6 years

anonymous · Answer

oooohhh

anonymous · Answer

ok wat about the 1.02?

anonymous · Answer

where did that come from?

anonymous · Answer

So .02 is the interest rate but you still have to add that to the original price. So it's original price+.02*original price*6. I just factored out original price.

anonymous · Answer

If it makes more sense just calculate the final cost as FC = OP+.02*OP*6

anonymous · Answer

16,000 * 0.02 * 6 = 1920

anonymous · Answer

1920÷72 = $26?

anonymous · Answer

1920 is the interest you have to pay on the car...but remember you have to pay the original price of 16,000 also. the total price is 17920 right

anonymous · Answer

ok so is this  wat i have to do 
16,000 • 0.02 • 6 = 1920
1920 + 16000 = 17920
17920 ÷ 72 = $248.8

anonymous · Answer

Correct. Now just pick which option is lower and bingo

anonymous · Answer

ok thank you soo much

anonymous · Answer

Np