Answered

Discover a wealth of knowledge at Westonci.ca, where experts provide answers to your most pressing questions. Ask your questions and receive precise answers from experienced professionals across different disciplines. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

You borrow [tex]$\$[/tex]18,000[tex]$ with a term of four years at an APR of $[/tex]4\%[tex]$ to buy a truck. (Round your answers to 2 decimal places.)

a) What is your monthly payment?

\[
N: \square \text{ months}
\]
\[
I\%: \square
\]
\[
P.V: \$[/tex] \square
\]
[tex]\[
PMT: \$ \square
\][/tex]
[tex]\[
F.V: 0
\][/tex]
[tex]\[
P/Y: 12
\][/tex]
[tex]\[
C/Y: 12
\][/tex]

b) How much is the total amount paid over the life of the loan?

HINT: [tex]$A = \text{PMT} \times N \text{ months}$[/tex]

[tex]\[
A = \$ \square
\][/tex]

c) How much total interest is paid over the life of the loan?

HINT: Total Amount Paid (A) minus Principal (P).

[tex]\[
I = A - P: \$ \square
\][/tex]

Sagot :

GinnyAnswer
To find the solution to the problem, we need to follow these steps:

### Given Data:
- Principal (P): [tex]$18,000 - Annual Percentage Rate (APR): 4% - Term: 4 years ### Part a) Calculation of Monthly Payment (PMT) First, let's summarize the information provided: N : $[/tex]\square[tex]$ months \\ $[/tex]I \%[tex]$: $[/tex]\square[tex]$ \\ P.V: $[/tex]S[tex]$ $[/tex]\square[tex]$ \\ PMT: $[/tex]\[tex]$[/tex] [tex]$\square$[/tex] \\
F.V: 0 \\
[tex]$P / Y$[/tex]: 12 \\
[tex]$C / Y$[/tex]: 12 \\

1. Convert the term in years to months:
[tex]\[ N = \text{Term in years} \times 12 \][/tex]
[tex]\[ N = 4 \times 12 = 48 \text{ months} \][/tex]
So,
[tex]\[ N = 48 \text{ months} \][/tex]

2. Calculate the monthly interest rate:
[tex]\[ \text{APR} = 4\% = 0.04 \][/tex]
[tex]\[ \text{Monthly Interest Rate} = \frac{\text{APR}}{12} = \frac{0.04}{12} = 0.003333.\ldots \][/tex]
So,
[tex]\[ I = 0.003333.\ldots \][/tex]

3. Use the loan payment formula to calculate the monthly payment. The formula for the monthly payment (PMT) is:
[tex]\[ \text{PMT} = P.\text{V} \times \left(\frac{I}{1 - (1 + I)^{-N}}\right) \][/tex]

Substitute the known values into the formula:
[tex]\[ PMT = 18000 \times \left(\frac{0.003333.\ldots}{1 - (1 + 0.003333.\ldots)^{-48}}\right) \][/tex]

This calculation results in:
[tex]\[ PMT = \$406.42 \][/tex]

So the monthly payment is:
[tex]\[ \boxed{\$406.42} \][/tex]

### Part b) Calculation of Total Amount Paid Over the Life of the Loan

To find the total amount paid over the life of the loan, we multiply the monthly payment by the total number of payments:

[tex]\[ A = \text{PMT} \times N \][/tex]
[tex]\[ A = 406.42 \times 48 \][/tex]
[tex]\[ A = \$19508.3 \][/tex]

So the total amount paid over the life of the loan is:
[tex]\[ \boxed{\$19508.30} \][/tex]

### Part c) Calculation of Total Interest Paid Over the Life of the Loan

The total interest paid is the total amount paid over the life of the loan minus the principal:

[tex]\[ I = A - P \][/tex]
[tex]\[ I = 19508.3 - 18000 \][/tex]
[tex]\[ I = \$1508.3 \][/tex]

So the total interest paid is:
[tex]\[ \boxed{\$1508.30} \][/tex]

In summary:
a) The monthly payment is [tex]\(\$406.42\)[/tex].
b) The total amount paid over the life of the loan is [tex]\(\$19508.30\)[/tex].
c) The total interest paid over the life of the loan is [tex]\(\$1508.30\)[/tex].
We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.