Question

suppose that you borrow $17,000 for five years at 5% toward the purchase of a car. use $pmt = \frac{p\left(\frac{r}{n}\
ight)}{\left1 - \left(1 + \frac{r}{n}\
ight)^{-nt}\
ight}$ to find the monthly payments and the total interest for the loan.

the monthly payment is $ 320.81
(do not round until the final answer. then round to the nearest cent as needed.)

the total interest for the loan is $\square
(use the answer from part (a) to find this answer. round to the nearest cent as needed.)

Explanation:

Step1: Determine total payments

The loan is for 5 years, with monthly payments. So the number of payments \( n_{total} = 5\times12 = 60 \). The monthly payment \( PMT = 320.81 \). So total payments \( = PMT\times n_{total}=320.81\times60 \)

$$ 320.81\times60 = 19248.6 $$

Step2: Calculate total interest

The principal \( P = 17000 \). Total interest \( = \) total payments \( - \) principal. So total interest \( = 19248.6 - 17000 \)

$$ 19248.6 - 17000 = 2248.6 $$

Answer:

The total interest for the loan is \(\$2248.60\)