You are purchasing a 2015 Chrysler 200 for $19,400, with 20% down. The balance will be...

90.2K

Verified Solution

Question

Finance

You are purchasing a 2015 Chrysler 200 for $19,400, with20% down. The balance will be financed at 7.6% over seven yearswith monthly payments. Find:
Monthly payment
Total interest charges
Interest in month three
How much interest is saved if you increase monthly payments by$50?
Five years later you sell for $5,000, and you must pay off theremaining loan balance when sold. What is your net cash positionafter selling?
Note: average auto depreciation isalmost 50% in three years; Chrysler has poorest resale of alldomestic manufacturers.
A few hints:
Be exact with your PMT. Don't round. Over many time periods, itresults in significant imprecision.
For monthly interest, #1 -- find PMT, #2 -- find interest bymultiplying principal x rate x time (1/12 of a year). #3 --subtract interest from payment. #4 -- difference is principalreduction for the 1st month. #5 -- subtract #4 from originalprincipal balance, then repeat step 2.
Use a finance calculator or Excel. No tables. Avoidmodeling...imprecision and errors are common.

Answer & Explanation Solved by verified expert

3.8 Ratings (373 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

You are purchasing a 2015 Chrysler 200 for $19,400, with20% down. The balance will be financed at 7.6% over seven yearswith monthly payments. Find:Monthly paymentTotal interest chargesInterest in month threeHow much interest is saved if you increase monthly payments by$50?Five years later you sell for $5,000, and you must pay off theremaining loan balance when sold. What is your net cash positionafter selling?Note: average auto depreciation isalmost 50% in three years; Chrysler has poorest resale of alldomestic manufacturers.A few hints:Be exact with your PMT. Don't round. Over many time periods, itresults in significant imprecision.For monthly interest, #1 -- find PMT, #2 -- find interest bymultiplying principal x rate x time (1/12 of a year). #3 --subtract interest from payment. #4 -- difference is principalreduction for the 1st month. #5 -- subtract #4 from originalprincipal balance, then repeat step 2.Use a finance calculator or Excel. No tables. Avoidmodeling...imprecision and errors are common.