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Sagot :
Using simple interest, it is found that $97.06 of interest is accrued after the first month.
Simple Interest
Simple interest is used when there is a single compounding per time period.
The amount of interest after t years in is modeled by:
[tex]I(t) = Prt[/tex]
In which:
- P is the principal.
- r is the interest rate, as a decimal.
In this problem, first we have to find the total price of purchase of the car, which is $19,725.00 plus 4.75% sales tax, hence:
[tex](1 + 0.0475) \times 19725 = 1.0475(19725) = 20662[/tex]
Then:
- Considering a down payment of $2,175, the principal is of P = 20662 - 2175 = 18487.
- New car and average credit rating, hence the interest rate is of 6.30%, that is, r = 0.063.
- We want the interest earned after one month, considering the time is measured in years, we have that [tex]t = \frac{1}{12}[/tex].
Then:
[tex]I\left(\frac{1}{12}\right) = 18487(0.063)\frac{1}{12} = 97.06[/tex]
$97.06 of interest is accrued after the first month.
You can learn more about simple interest at https://brainly.com/question/25296782
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