Benny132
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Option 1: Make a down payment of $1500 and finance the rest of $20000 at 1.9% interest rate, making equal monthly payments for 5 years.

Option 2: Get a rebate of $1500 to use for your down payment and finance the rest of $20000 at 2.9% interest, still making equal monthly payment for 5 years.
You are not sure you can afford either of the monthly payments at the first dealer, so you approach the other dealer to see if she can help you. She says that you can have a monthly payment that is $100 less if you make payments for a longer period of time. You don't have to make a down payment, and you will get an interest rate of 2.9%

Your task:
Determine how long it will take you to pay off your car with this option. Use a monthly payment that is $100 lower than the smaller of the two payments you calculated with the previous options.

Respuesta :

Option 1 : We know that we have to make a down payment of $1500 and finance the rest of $20000 at a 1.9% interest rate, making equal monthly payments for 5 years. Our first step to solve this problem would be to convert 5 years into months. 

1 year = 12 months 

12 * 5 = 60 months 

Therefore, in 5 years there are 60 months. 

Now lets solve this problem step by step. 

Subtract the down payment from $20,000

$20000-$1500=$18500

Multiply the remaining number by the interest rate. 

$18500 *1.9 = $35150 

Divide 35150 by number of months in 5 years (60)

$35150 / 60 = $585 

Therefore, you have to pay $585 per month. 

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