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Suppose you want to buy a new car that costs $32,800. You have no cash –...

Suppose you want to buy a new car that costs $32,800.

You have no cash – only your old​ car, which is worth $4000

as a​ trade-in. The dealer says the interest rate is 4​%

​add-on for 5 years. Find the monthly payment.

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Answer #1

Monthly payment:

= ($32,800-$4,000)×(1+4%×5)/60

= $28,800×1.2/60

= $576

Hence, Monthly payment is $576

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