if robert buys a $20,000 car with a down - payment of $2,000 and is given a 3 - year loan with an apr of…

if robert buys a $20,000 car with a down - payment of $2,000 and is given a 3 - year loan with an apr of 10.4 percent and monthly payments of $584.20, what is the dollar amount of the finance charge on this loan?\na. $3,031.20\nb. $2,048.72\nc. $18,000.00\nd. $21,031.20

if robert buys a $20,000 car with a down - payment of $2,000 and is given a 3 - year loan with an apr of 10.4 percent and monthly payments of $584.20, what is the dollar amount of the finance charge on this loan?\na. $3,031.20\nb. $2,048.72\nc. $18,000.00\nd. $21,031.20

Answer

Explanation:

Step1: Calculate the loan amount

The car costs $20,000 and the down - payment is $2,000. So the loan amount $L=20000 - 2000=18000$.

Step2: Calculate the total amount repaid

The loan is for 3 years. Since there are 12 months in a year, the number of payments $n = 3\times12=36$ months. The monthly payment $M = 584.20$. So the total amount repaid $T=n\times M=36\times584.20 = 20911.2$.

Step3: Calculate the finance charge

The finance charge $FC=T - L$. Substitute $T = 20911.2$ and $L = 18000$ into the formula. So $FC=20911.2-18000 = 2911.2$.

Answer:

None of the provided options are correct. If there is a calculation error in the above process or a mis - understanding of the problem, please double - check the problem details.