Questions: Suppose you want to buy a new car that costs 46,300. You have no cash - only your old car, which is worth 2000 as a trade-in. The dealer says the interest rate is 3% add-on for 5 years. Find the total amount to be repaid. The total amount to be repaid is .

Solution Steps

To find the total amount to be repaid for the car, we need to calculate the interest on the loan and add it to the principal amount. The principal amount is the cost of the car minus the trade-in value of the old car. The interest is calculated using the add-on interest method, which involves multiplying the principal by the interest rate and the number of years. Finally, add the interest to the principal to get the total amount to be repaid.

The principal amount is the cost of the new car minus the trade-in value of the old car. This can be expressed as: \[ \text{Principal} = \text{Car Cost} - \text{Trade-in Value} = 46300 - 2000 = 44300 \]

The total interest is calculated using the add-on interest method. The formula for the total interest is: \[ \text{Total Interest} = \text{Principal} \times \text{Interest Rate} \times \text{Loan Years} = 44300 \times 0.03 \times 5 = 6645 \]

The total amount to be repaid is the sum of the principal and the total interest: \[ \text{Total Repayment} = \text{Principal} + \text{Total Interest} = 44300 + 6645 = 50945 \]

Final Answer