Question

Jordan has decided to purchase a $17,500 car and would like to finance it for five years. Her bank has offered her a standard 6.9% APR, while the dealership has offered her a special 4.9% APR. How much money will she save each month by choosing financing through the dealership

Answer 1

Answer:

Jordan will save $16.25 each month by choosing financing through the dealership.

Step-by-step explanation:

The EMI formula is :

$\frac{p\times r\times(1+r)^{n}}{(1+r)^{n}-1}$

Case 1:

p = 17500

r = $6.9/12/100=0.00575$

n = $5\times12=60$

Putting the values in formula;

$\frac{17500\times0.00575\times(1+0.00575)^{60}}{(1+0.00575)^{60}-1}$

=> $\frac{17500\times0.00575\times(1.00575)^{60}}{(1.00575)^{60}-1}$

EMI = $345.70

Case 2:

p = 17500

r = $4.9/12/100=0.004083$

n = $5\times12=60$

Putting the values in formula;

$\frac{17500\times0.004083\times(1+0.004083)^{60}}{(1+0.004083)^{60}-1}$

=> $\frac{17500\times0.004083\times(1.004083)^{60}}{(1.004083)^{60}-1}$

EMI = $329.45

So, difference per month in payments will be :

$345.70-329.45=16.25$ dollars

Hence, Jordan will save $16.25 each month by choosing financing through the dealership.

Answer 2

Answer:

$16.25

Step-by-step explanation:

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