Anna Conda purchased a new Toyota Tundra pickup truck for $35,000 and financed $

Question

Anna Conda purchased a new Toyota Tundra pickup truck for $35,000 and financed $31,000 with a 5 year, 4% loan. Following the format of the loan disclosure statement, answer the following questions.

What is the APR of the loan?

6%

5%

4%

3%

1 points   

QUESTION 2

What is the total of all of the loan payments made?

$34,261

$34,970

$33,264

$32,834

1 points   

QUESTION 3

What is the actual amount borrowed?

$35,000

$33,000

$31,000

$29,000

1 points   

QUESTION 4

What is total finance or interest cost associated with the loan?

$3434

$3261

$3070

$2964

1 points   

QUESTION 5

The interest charged on this loan is calculated by

simple interest

compound interest

6%

5%

4%

3%

Explanation / Answer

present value of annuity = payment per period * [ 1 - (1+i)^-n ]/i

=>

31000 = x * [1-(1+4%/12)^-60]/4%/12

=>

x = 570.91

a)

APR = 4%

b)

total payment = 570.91 * 60 =34261

c)

actual amount borrowed = 31000

d)

total interest = 34261 - 31000 = 3261

e)

compound interest

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