Show all work and formulas 1.) After finding out that the dealer\'s cost of a VW
ID: 2803109 • Letter: S
Question
Show all work and formulas
1.) After finding out that the dealer's cost of a VW was 11.7% lower than its sticker price of $17,350, Julia visited a local dealership on September 15, 2016. She was able to negotiate a price that left the dealer with a modest profit margin of 9.5% over the invoice price, and have him agreed to honor a rebate coupon of $250 that she submitted. The dealer offered to finance 83% of the total cost at an APR of 9.25% so she can pay off the Auto loan by September 15, 2020. Before signing the contract, Julia ordered a $300 optional stereo unit to be installed and other additional accessories at a cost of $80.00. Title fees, license plate charges, and sales taxes would be paid later at the Registry of Motor Vehicles. How much would Julia pay per month?
Explanation / Answer
To calculate the amount needed to pay per month, need to calculate amount of financing.
Amount of financing= Net payable on invoice amount * 83%
Net payable on invoice amount= Invoice amount - 250 coupon
Invoice amount:
Original sticker price= 17350
cost of VW= 17350* (1-11.7%)= 15320.05
now dealer has 9.5% profit on invoice amount, we know cost but not revised invoice amount.
since invoice amount= cost + margin
cost= invoice amount- margin= 100%-9.5%= 90.5% of invoice amount
cost= 15320.05
invoice amount= 15320.05/90.5%= 16928.23
Net amount payable on invoice= 16928.23 -250= 16678.23
amount of financing= 16678.23*83%= 13482.93
financing is for 4 years, payable every month hence no of payments= 4*12= 48
calculation of monthly payment:
monthly payment= 338.73
Period payment = [P x R x (1+R)^N]/[(1+R)^N-1] Using the formula: Principle P 13482.93 Rate of interest per period R 0.7917% Number of payments N 48 Period payment using the formula 338.73