1) The price of a new car is $16,000. Assume that an individual makes a down payment of 25% toward the purchase of the car and secures financing for the balance at the rate of 5%/year compounded monthly.

(a) What monthly payment will she be required to make if the car is financed over a period of 24 months? Over a period of 72 months?

(b) What will the interest charges be if she elects the 24-month plan? The 72-month plan?