8
QuizMultiple Choice

Amortization — Quiz

Question 8 • Financial Algebra/Mathematics

Big Ed’s car dealership is running a special on 2008 trucks. Big Ed offers financing at a rate of 6 point 7 1 percent on a loan with a term of 36 months, but he requires the customer to make a down payment of 15 percent of the cost of the vehicle. You are interested in a Car Crusher truck that costs 25 dollars comma 230 Not including the down payment, how much will you pay over the lifetime of the loan?

Answer
A
21 dollars comma 445 point 5 0
B
27 dollars comma 924 point 8 4
C
23 dollars comma 735 point 8 8
D
25 dollars comma 789 point 3 2

Explanation

The down payment is 15% of $25,230, so the amount financed is $25,230 × 0.85 = $21,445.50. For a 36-month loan at 6.71% annual interest, the monthly payment is about $659.33 using the standard fixed-payment loan formula. Multiplying by 36 gives about $23,736 in total loan payments, so the closest choice is $23,735.88.

AI-written and checked against the verified answer.

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