After careful comparison shopping, Bill Withers decides to buy a new Toyota Camry. With some options added, the car has a price of $23,558-including plates and taxes. Because he can't afford to pay cash for the car, he will use some savings and his old car as a trade-in to put down $8,500. He plans to finance the rest with a $20,000, 60-month loan at a simple interest rate of 4 percent.
a. What will his monthly payments be?
b. How much total interest will Bill pay in the first year of the loan? (Use a monthly payment analysis procedure similar to the one in Exhibit 7.6.)
c. How much interest will Bill pay over the full (60-month) life of the loan?
d. What is the APR on this loan?