Riley is buying a new car. The sticker price on the car is $16,999. The bank has offered
him a loan that has 3.9% APR for 4 years. If Riley is required to pay a 10% down payment
and sales tax in Texas is 6.25%, how much money will Riley pay over the life of the loan?
$18,765
$19,535
O $19,397
$16,999
Next

  $19,389

Step-by-step explanation:

The amount Riley is being charged for the car is ...

  (sticker price) + tax = 16,999 + 0.0625·16,999 = 16,999 +1062.44 = 18061.44

The amount he is paying as a down payment is 10& of this value:

  down payment = 10% · $18,061.44 = $1,806.14

Then the amount being financed is ...

  financed amount = purchase price - down payment

  = $18,061.44 -1,806.14 = $16,255.30

__

The amortization formula is good for finding the monthly payment.

  A = P(r/12)/(1 -(1 +r/12)^(-12t))

where P is the amount financed at rate r for t years.

  A = $16,255.30(0.039/12)/(1 -(1 +0.039/12)^(-12·4)) = $366.30

The total Riley will pay is the sum of the monthly payments and the initial down payment:

  total paid = 48·$366.30 +1,806.14 = $19,388.54 ≈ $19,389

The closest offered choice is $19,397.

Comment on answer choices

We suspect the answer key computation involved some rounding somewhere.

13875138answer:

step-by-step explanation:

use a calculator!

equal to

step-by-step explanation: