Question

29. In 2014, some dealers offered two different financing incentives dealers offered two different financing incentives on the Honda Civic. The first option was 0.9% financing for loans from 24 to 36 months, while the se or loans from 24 to 36 months, while the second option was 1.9% financing for loans from 37 to 60 months. Suppose that a buyer needed to fina Vetermine the payment if the buyer chose the 0.9% financing for 36 months. Find the total amount that the buyer paid for this option. 29a. The payment is: 29b. The total time t=0 cost is: Determine the payment if the buyer chose the 1.9% financing for 60 months. Find the total amount that the buyer paid for this option. 29c. The payment is: 1 29d. The total time t=0 cost is:

Answer 1

29a) & 29 b)

Interest (I)= Principal (P)* Time (T) in Years *Rate of Interest (R)/100

As per the Question Principal (P) =$15000

Time (T)= 36 months =3 Years

Rate of Interest (R)=0.9%

Interest (I)=$15000*3*0.9/100 =$405 for a period of 36 months

29 a) Total amount payable under this option is Principal + Interest=$15000 +$405= $15405

29 b) Cost= Interest= $405.

29 c)

As per the Question Principal (P) =$15000

Time (T)= 60 months =5 Years

Rate of Interest (R)=1.9%

Interest (I)=$15000*5*1.9/100 =$1425 for a period of 60 months.

29 c) Total amount payable under this option is Principal + Interest=$15000 +$1425= $16425

29 d) Cost = Interest=$1425