Solve This Problem

Question

Investigate the effect of the term on simple interest amortized auto loans by finding the monthly payment and the total interest for a loan of $11,000 at 8 and 7/8% interest if the term is the following. (Round all answers to the nearest cent.)

(a) 3 years.

(b) 4 years.

(c) 5 years.

Answer 1

So, rounding to the nearest cent:

1. For 3 years, the monthly payment is approximately $402.95 and the total interest is approximately $3,504.20.
2. For 4 years, the monthly payment is approximately $326.69 and the total interest is approximately $4,685.68.
3. For 5 years, the monthly payment is approximately $280.65 and the total interest is approximately $5,839.00.