Question

tess is going to purchase a new car that has a list price of $29,190. she is planning on trading in her good-condition 2006 dodge dakota and financing the rest of the cost over four years, paying monthly. her finance plan has an interest rate of 10.73%, compounded monthly. tess will also be responsible for 7.14% sales tax, a $1,235 vehicle registration fee, and a $97 documentation fee. if the dealer gives tess 75% of the listed trade-in price on her car, once the financing is paid off, what percent of the total amount paid over four years would be interest? (consider the trade-in to be a reduction in the amount paid.)

\

$$\begin{tabular}{|l|c|c|c|c|c|} \\hline \\multicolumn{6}{|c|}{dodge cars in good condition} \\\\ \\hline model/year & 2004 & 2005 & 2006 & 2007 & 2008 \\\\ \\hline viper & \\$7,068 & \\$7,225 & \\$7,626 & \\$7,901 & \\$8,116 \\\\ \\hline neon & \\$6,591 & \\$6,777 & \\$6,822 & \\$7,191 & \\$7,440 \\\\ \\hline intrepid & \\$8,285 & \\$8,579 & \\$8,699 & \\$9,030 & \\$9,121 \\\\ \\hline dakota & \\$7,578 & \\$7,763 & \\$7,945 & \\$8,313 & \\$8,581 \\\\ \\hline \\end{tabular}$$

a. 21.39%
b. 19.15%
c. 23.43%
d. 18.98%

Explanation:

Find trade-in value

Using the Table Reading and Trade-in Valuation knowledge points

$$
LATEXBLOCK0
$$

Calculate total purchase cost

Using the Sales Tax Calculation knowledge point

$$
LATEXBLOCK1
$$

Calculate monthly payment

Using the Loan Monthly Payment and Car Financing knowledge points

$$
LATEXBLOCK2
$$

Calculate total paid and interest

Using the Car Financing knowledge point

$$
LATEXBLOCK3
$$

Answer:

• a. 21.39%
• b. 19.15%
• c. 23.43%
• d. 18.98% (Correct answer)