Question

You want to buy a new sports coupe for $84,600and the finance office at the dealership has quoted you an APR of 7.1 percent, compounded monthly, for 72 months. How much interest will you pay over the life of the loan assuming you make all payments on a timely basis

Answer 1

Answer: $20981.52

Explanation:

Loan amount = $84600

APR = 7.1% = 0.071

Monthly interest rate = 0.071/12 = 0.0059167

Number of months NPER = 72

Future value FV = 0

Monthly payment = PMT(0.0059167, 72, -84600, 0, 0) = $1466.41

Total loan payment = 72 × $1466.41 = $105581.52

Interest paid = Total loan payment - Loan amount

= $105581.52 - $84600

= $20981.52