Question

Cassandra purchased a new car. The car had a list price of $16,870. Cassandra made a down payment of $1,800 and financed the rest, paying 12. 3% interest compounded monthly over a payment period of four years. If Cassandra also had to pay 7. 8% sales tax, a $895 vehicle registration fee, and a $68 documentation fee, what is her monthly payment? a. $446. 74 b. $459. 42 c. $461. 41 d. $507. 9.

Answer 1

Cassandra's monthly payment for the financing of her new car is b. $459. 42.

Data and Calculations:

List price of Cassandra's car = $16,870

Sales tax (7.8%) = $1,315.86 ($16,870 x 7.8%)

Vehicle Registration Fee = $895

Documentation Fee = $68

Total costs = $19,148.86

Down payment = $1,800

Amount financed after the down payment = $17,348.86 ($19,148.86 - $1,800)

Monthly payment:

N (# of periods) = 48 (4 years x 12 months)

I/Y (Interest per year) = 12.3%

PV (Present Value) = $15,070

FV (Future Value) = $0

Results:

Monthly Payment = $459.42

Sum of all periodic payments = $22,052.24

Total Interest = $4,703.38

Thus, her monthly payment is b.

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