Question

+-/3 points TanFin11 5.3.038. My Notes Darla purchased a new car during a special sales promotion by the manufacturer. She secured a loan from the manufacturer in the amount of $17,000 at a rate of 4.1%/year compounded monthly. Her bank is now charging 6.8%/year compounded monthly for new car loans. Assuming that each loan would be amortized by 36 equal monthly installments, determine the amount of interest she would have paid at the end of 3 years for each loan. How much less will she have paid in interest payments over the life of the loan by borrowing from the manufacturer instead of her bank? (Round your answers to the nearest cent.) interest paid to manufacturer $ interest paid to bank savings जी की Need Help? Read It Talk to a Tutor + 1/3 points Previous Answers TanFin11 5.3.040. My Notes Paula is considering the purchase of a new car. She has narrowed her search to two cars that are equally appealing to her. Car A costs $26,000, and Car B costs $26,500. The manufacturer of Car A is offering 0% financing for 48 months with zero down, while the manufacturer of Car B is offering a rebate of $2000 at the time of purchase plus financing at the rate of 3%/year compounded monthly over 48 months with zero down. If Paula has decided to buy the car with the lower net cost to her, which car should she purchase? (Round numerical values to the nearest cent.) net cost of Car A net cost of Car B car she should purchase Car A Need Help? Read It Talk to a Tutor

Answer 1

1	Interest paid to manufacturer	$1,095.92
	Interest paid to bank	$1,840.87
	Savings	$744.95
2	Net cost of car A	26000
	Net cost of car B	26029.97
	Car she should purchase	Car A

Q2: Net costof car A= same as its original cost since there is no interest charged on the instalments. In calculating the net cost of car B, we multiply number of payments which is 48 by the monthly payment. The monthly payment is computed on the after rebate value of the car which is 26,500 -2000.

Workings

AutoSave © of HO- Book1 - Excel Sign in - o X File Home Insert Draw Page Layout Formulas Data Review View Help O Tell me what you want to do Share Comments = = Calibri B I U - 11 - - A À - A - = dan ab E 3- General $ - % 9 Insert Delete - Format 2' AZ O T- Sort & Find & Filter - Select Paste Conditional Format as Formatting Table Cell Styles Clipboard Font Alignment Number Styles Cells Editing B2 Interest paid to manufacturer A в 1 21 Interest paid to manufacturer Interest paid to bank Savings |--CUMIPMT(4.1%/12,36,17000,1,36,0) =-CUMIPMT(6.8%/12,36,17000,1,36,0) =C3-C2 62 Net cost of car A Net cost of car B Car she should purchase 26000 =48*PMT(3%/12,48,-(26500-2000)) Car A