Terry has just purchased a new car, which had a list price of $16,825. She had to pay 7.19% sales tax, a $1,128 vehicle registration fee, and a $190 documentation fee. Terry traded in her previous vehicle, a 2003 Honda Element in good condition to use as a downpayment. The dealer paid full price for her trade in. She financed the rest of the cost over five years at an interest rate of 10.59%, compounded monthly. What is her monthly payment? (Round all dollar values to the nearest cent.) Honda Cars in Good Condition Model/Year 2000 2001 2002 2003 Element $5,887 $6,080 $6,225 $6,622 Odyssey $8,450 $8,693 $8,928 $9,224 Insight $4,384 $4,661 $5,006 $5,440 Accord $6,356 $6,626 $6,817 $7,114
The 2003 Honda Element trade-in is worth $6,622. The car’s price with sales tax is $16,825 × 1.0719 = $18,034.72; adding the $1,128 registration fee and $190 documentation fee, then subtracting the trade-in, gives a financed amount of $12,730.72. With a monthly rate of 10.59% ÷ 12 and 60 payments, the loan payment is about $274.20 per month, so the correct choice is $274.20.
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