Question

Eaton purchased a boat for $11,975. He made a down payment of $3,500. He applied for a five-year installment loan with an interest rate of 11.2%. What is the total cost of the boat after five years?

Answer 1

Help?

Answer 2

ANYONE HELP?!?!

Answer 3

completely stuck? or were you able to get somewhere?

Answer 4

YAY JIM

Answer 5

lol

Answer 6

completely stuck, ive been at this question for like 20 mins, and im brain DEAD lol

Answer 7

i see, ok well if the boat costs $11,975 (total cost + taxes etc etc) and he paid $3,500 as a down payment

then how much is financed?

Answer 8

i have like 9 questions left and im totally brain dead

Answer 9

once again jim, im brain dead, might as well be a zombie

Answer 10

you can tell me how much is financed at least

Answer 11

how much does he need to borrow

Answer 12

8475?

Answer 13

so this is the principal of the loan

Answer 14

Okay

Answer 15

the term of the loan is 5 years

Answer 16

interest rate (annual it looks like) is 11.25%

and I'm going to assume interest is compounded monthly (that's usually how monthly payment deals are structured)

Answer 17

11.2% I meant to say

Answer 18

Yes

Answer 19

so to find the total cost of the loan, we need to find out his monthly payments first

Answer 20

i got 14,508, but its not in options

Answer 21

so we turn to this formula

M = L[c(1+c)^n]/[(1+c)^n - 1]

where

M = monthly payment
L = principal (amount loaned out)
c = monthly interest rate
n = number of terms (ie number of months)

Answer 22

just tried it again and i got 14,798.46

Answer 23

but thats wrong too

Answer 24

in this case,

M = unknown
L = 8475
c = 0.112/12 = 0.0093333
n = 12*5 = 60

plug all this into the formula to get

M = L[c(1+c)^n]/[(1+c)^n - 1]

M = 8475*[0.0093333(1+0.0093333)^60]/[(1+0.0093333)^60 - 1]

M = ??

Answer 25

i got 182.26...

Answer 26

hmm I'm getting M = 185.113303581369 ---> M = 185.11

Answer 27

roundoff error most likely

Answer 28

yeah, thats what im thinking

Answer 29

anyways, that's how much he pays per month for 60 months

Answer 30

yes sir

Answer 31

so in total, he will pay 60*185.11 = 11,106.60 dollars

Answer 32

the choice that is closest is $11,106.81

Answer 33

hmm

Answer 34

I wonder if you're supposed to use tables somewhere

Answer 35

instead of a calculator

Answer 36

i have no clue, lol

Answer 37

i dont think so

Answer 38

maybe to calculate some piece (or all) of the monthly payment

Answer 39

i dont even know how to do that then

Answer 40

because usually, tables take complicated expressions and reduce them to simpler multipliers

Answer 41

now that calculators have taken over, tables are a bit outdated, but some books may still use them

Answer 42

yeah, i dont know haha

Answer 43

hmm you'll have to ask your teacher about it

Answer 44

so we cant do this one?

Answer 45

might as well go with the closest thing then

Answer 46

thats what im thinking

Answer 47

thanks @jim_thompson5910

Answer 48

it's not off by much tbh....but the fact that it's off is troubling

Answer 49

i know right haha, my OCD is exploding

Answer 50

21 cents is not a lot compared to the 11 thousand dollars, so it shouldn't matter lol

Answer 51

true, thank bud

Answer 52

np