Darla purchased a new car during a special sales promolion by Lhe manufaclurer.

Question

Darla purchased a new car during a special sales promolion by Lhe manufaclurer. She secured from the marnufacturer in the amounl of $22,000 al a rale of 8%/year pounded monthly. Her bank is now charging 11.3%/ycar compounded monthly for new car loans. Assuming that cach loan would be amortized by 35 cqual monthly installments, determine the amount of interest she would havc paid at the end of 3 yr for cach loan How much less wll she have paid in interest payments aver the life of the loan by horrowing from the manufacturer instead o her hank? (Round your answers to the nearest cent) interest paid to manufacturer interest paid to hank savings

Explanation / Answer

a) Interest paid to manufacturer $ 2,818.40 PMT(8%/12,36,-22000)*36-22000 b) Interest paid to bank $ 4,041.68 PMT(11.3%/12,36,-22000)*36-22000 c) Savings $ 1,223.28 4041.68-2818.40

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