Question

Charles is going to purchase a new car that has a list price of $21,450. He is planning on trading in his good-condition 2004 Dodge Neon and financing the rest of the cost over three years, paying monthly. His finance plan has an interest rate of 12.28%, compounded monthly. Charles will also be responsible for 6.88% sales tax, a $1,089 vehicle registration fee, and a $124 documentation fee. If the dealer gives Charles 80% of the listed trade-in price on his car, once the financing is paid off, what percent of the total amount paid will the interest be? (Consider the trade-in to be a reduction in the amount paid.)
Dodge Cars in Good Condition
Model/Year
2004
2005
2006
2007
2008
Viper
$7,068
$7,225
$7,626
$7,901
$8,116
Neon
$6,591
$6,777
$6,822
$7,191
$7,440
Intrepid
$8,285
$8,579
$8,699
$9,030
$9,121
Dakota
$7,578
$7,763
$7,945
$8,313
$8,581
a.
17.64%
b.
15.67%
c.
16.70%
d.
12.86%

Answer 1

Answer:

The answer is C

Step-by-step explanation:

The after-tax amount Charles from saling his 2004 Neon is : 6,591 x 80% x ( 1 - 6.88%) = $4,910

The total amount Charles has to pay for the new car : $ 21,450 + 1,089 + $124 = $22,663

The total amount Charles has to get from finance plan : $ 22,663 - 4,910 = $17,753

For the finance plan, we have: Monthly IR = 12.28% /12 = 1.023%; Number of payment(N) = 12 x 3 = 36; Present value (PV) = Financing amount = $17,753

We apply the present value formular for annuity to find the equal payment Charles needs to pay monthly : C = (PV x Monthly IR) : ( 1 - (1+i)^(-n) ) = $592

So the total repayment needs to be make in Charles' finance plan = $592 x 36 = $21,312

The total interest expenses is: Total repayment - Financing Amount = $21,312 - $17,753 = $3,559 => percentage of total interest expenses in the amount paid = 3,559/21,312 = 16.70%

Answer 2

Answer: is C

Step-by-step explanation:

16.70% XD OWO -W- ;$