Question

You are going to purchase a new car, but being a responsible consumer means doing a little bit of research first.

First, you find the vehicle you are purchasing and its price.
Vehicle: Chevy Volt
Price: $39,145

Current interest rate: 3%

Answer 1

Using the function A(t)=P(1+rn)nt, create the function that represents your new car loan that is compounded monthly. The principle will be the price of the vehicle you selected, not how much you are putting down.

Answer 2

Being a smart financial planner, you want to figure out how many months it will be until your principal is paid down to $10,000.00. Solve for t and show all of your work. Note that t will be negative because the number of months will decrease the principal.

Answer 3

Lastly, you decide to keep track of your loan four times a month instead of monthly. Solve for the adjusted interest rate. Remember to use the formula A(t)=P[(1+rn)1c]cnt where c = 4. When solving for the adjusted interest rate, be sure to set it equal to 1+rn.

Answer 4

Each of the comments after the first is one of the questions, you get a grasp of the whole situation. However, my problem lies in the last question.

Answer 5

In the last question, it asks me to solve for the adjusted interest rate:does this mean I plug in all of the values except for r, and find it differently? Why would r have changed?

Answer 6

@mathstudent55 @Haseeb96 , any help?