Round to the nearest dollar. Suppose you are thinking about buying a car and have narrowed down your choices to two options: The new-car option: The new car costs $21,000 and can be financed with a four-year loan at 6.15%. The used-car option: A two-year old model of the same car costs $18,000 and can be financed with a four-year loan at 6.84% What is the difference in monthly payments between financing the new car and financing the used car? $65 $0 $66 $52
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We can use the formula for calculating the monthly payment on a loan: Monthly Payment = (Loan Amount * Interest Rate) / (1 - (1 + Interest Rate)^(-Number of Payments)) For the new car option: Loan Amount = $21,000 Interest Rate = 6.15% = 0.0615 (converted to Show more…
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