Answer :
To find the monthly payment for the new car, we'll first calculate the total amount to be financed, including the cost of the new car minus the trade-in value of the old car. Then, we'll calculate the total amount to be paid over the 5-year period with the given interest rate. Finally, we'll divide this total by the number of months (60 months) to find the monthly payment.
1. Total amount to be financed:
Cost of the new car - Trade-in value of the old car
$32,700 - $5,000 = $27,700
2. Total amount to be paid over 5 years with 3% add-on interest:
Total amount to be financed * (1 + (interest rate * number of years))
$27,700 * (1 + (0.03 * 5))
$27,700 * (1 + 0.15)
$27,700 * 1.15 = $31,855
3. Monthly payment:
Total amount to be paid / number of months
$31,855 / 60 ≈ $530.92
So, the monthly payment for the new car would be approximately $530.92.
